"The Wisdom to Shirk"
by Bill Bonner
"Lord, grant me the strength to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference."
– American theologian Reinhold Niebuhr
YOUGHAL, IRELAND – "This week, we’re all getting on the same page… and the same chapter. Yesterday, we gave you what we think will be the pattern of the crisis ahead: (Fake) Boom… Bust… Re-Boom… Ka-Boom… Kabul. And today… we make sure we’re all reading the same book!
Here’s a letter from a non-fan, clearly not even in the library. Dear reader Nancy M. quotes a line from our Diary last week: “The Taliban are NOT feminists! They think there are two types of human – men and women – and that they are meant to play different roles.” She then comments: "Really? So it sits okay with you that their idea of what type of (sub)human women are is they are to be covered head to toe, not be educated, can’t go out without a male, not make any noise lest they awaken lust in a man, and if they try and rebel against this tyranny they are to be beaten and/or whipped? That’s quite the different role they’re to play, huh?!"
Nancy seems to believe that we (including she) know how the Taliban treat women in Afghanistan… that we (including she) know how women should be treated… and that anyone cares what we think.
Live and Let Live: But that was the whole point. No… No… And no… Everyone believes his own values, right now, are eternal and universal. Of course, they are not. Not even those of America’s elite, circa 2021. Things change – even our own thoughts and beliefs.
Besides, it’s the winners of wars who get to decide. They impose their values – as lame and repulsive as they may be. America lost the war in Afghanistan. Its values (if it has any) lost, too. Is that alright with us? Well, yes… God has given us the strength not to give a damn about a great many things. And if we were running U.S. foreign policy, we’d put a sign on the door: We don’t try to tell other people what to do; we expect the same favor from them.
The Way It Is: Continuing to mine this deep, philosophical vein, let’s look at the basics of economics and finance. Actions have consequences… Are we all agreed on that? And how about this: You can’t get something from nothing? Ex nihilo nihil fit. Everything requires some input. You have to do something to get something. Every investment produces a return – either positive or negative. Every action comes with a reaction.
So, let’s go further. Say’s Law – named after French economist Jean-Baptiste Say – tells us how you get wealthy. It’s a consequence… a reaction… to your own actions. You get by giving. You buy products and services by providing products and services to others, said Say. (Of course, an individual could also rob a bank… or get a stimmy check. We’re referring here to general rules that apply to societies and economies.)
How do you provide goods and services? You work. You put in time, energy, and resources. Even then, there’s no guarantee. If you dig a well, you have to find water. Otherwise, you’ve wasted your time. If you start a business, it has to make a profit… or you are not really increasing the net supply of wealth. If it loses money, it means you are actually making the world a poorer place.
In an honest economy, mistakes are constantly weeded out. It is the process of what Austrian economist Joseph Schumpeter called “creative destruction”… the past must die to make room for the future! Yes, Dear Reader, there are some things we just have to accept. So, let us gird our loins to fight the good fight… and say our prayers, that we may be lucky enough to win… ’cause that’s just the way it is.
Bloodsuckers: That’s why American economist Ken Rogoff was so wrong, writing in the Financial Times last month. He lauded the authorities – the U.S. Treasury and the Federal Reserve – for reacting “so quickly and proactively” to the COVID-19 crisis last year. As a result, “there were actually fewer corporate bankruptcies in 2020 than in 2019.” What this really means is that mistakes weren’t corrected… and the zombies multiplied. America’s money-losing, wealth-destroying enterprises continued to suck blood out of the economy, in other words. Keeping them alive was a mistake.
Some things you can change. Some things you can’t. Say’s Law and Schumpeter’s Creative Destruction are ones you can’t. No tricks… no magic… no Ph.D. theories can get around them.
Wisdom to Know the Difference: But wait… “Can’t we at least help people in crisis periods?” “Can’t we just use a little planning, at the top, to prevent corrections and make the economy run more smoothly?” “Can’t wise people in government intervene to change the things they can change – making sure the economy is running at 100% capacity… with full employment?” “Or how about a little stimulus from time to time… and liquidity for those who need it?”
“And… and… what about realizing our world improvement goals – less carbon output… equality… defeating the coronavirus… and providing high-quality broadband to poor people all over the planet?”
Surely we can accomplish some of those goals, no? Yes… and no. Some things you can change. Some things you can’t. Tune in tomorrow for more about which is which…"
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