Charles’ Note: I’m writing this today from Lima, Peru, where the city is enveloped in a damp fog that has me wishing I was literally anywhere else.
Lima is a lovely city… between the months of November and April. Then it’s time to “sell in May” and get the first flight out of town to escape the foggy months of June through late September. It starts to get tolerable again sometime around the middle of October.
Of course, getting to the airport is a challenge.
Lima has a brand-spanking new airport. The best in all of Latin America, in fact.
The problem is that the Peruvian government forgot to build a bridge over the Rimac river.
Somehow, in the multi-year process of building a new airport, it never occurred to anyone that the future patrons might need a way to get there that didn’t involve wading across a river with a suitcase on your head.
So, the route to the airport is a convoluted one involving shoddy “temporary” bridges… the sort that you’d throw up for an army to march across… that the population just assumes will be in use for the next fifty years (or until they fall into the river, whichever happens first).
That’s politics for you. And it’s why we’re almost always better off getting the government out of our lives.
Of course, government neglect goes far beyond failure to build an airport bridge. As Bill Bonner notes, when you let the “zero sum” crowd have too much power, things often get nasty fast.
As founder of Bonner Private Research, Bill has dedicated his life to understanding market insanity and using that knowledge to invest successfully. And he has boots on the ground in Argentina… a country with a long history of letting the zero-sum crowd make a mess of things.
Take it from here, Bill!
The Real Cost of Politics: Lessons from El Eternauta
By Bill Bonner, Bonner Private Research
What’s worse than losing money?
We shake our head in sympathy with Elon Musk. The naïve immigrant is likely to find out just how nasty politics can be.
Musk is now going head-to-head with Trump. The latter claims to have the Big, Beautiful Budget Bill that will MAGA (Make America Great Again) the country. The former says it’s an abomination.
MailOnline:
“I was, like, disappointed to see the massive spending bill, frankly, which increases the budget deficit, doesn’t decrease it, and undermines the work that the DOGE team is doing,” Musk told CBS Sunday Morning.
Despite its ambitions, reshaping tax law, overhauling immigration policy, and slashing Medicaid benefits in the future, Musk believes the bill is fundamentally at odds with the hard choices DOGE made to streamline government.
Musk is surely right. But he doesn’t control the IRS, NASA, SEC, FTC, FBI, NSA, and Pentagon. A win-lose guy does.
Yes, the primary trend in politics is MORE. And politics is win-lose. Politicians create no wealth. They just take it from the people who do. And Musk has a lot of it.
But taking Musk’s money may not be the worst of it.
The rise of politics makes people poorer. It brings an increase in nastiness too.
Many of the things that are worse than losing money are illustrated in a very popular Argentine Netflix drama called El Eternauta. It is a post-apocalyptic story based on a comic strip by Hector German Oesterheld.
In the story, extraterrestrials have invaded the world. First, they kill most of the population with a toxic snowfall. The rest they aim to remove by unleashing giant bugs and brainwashing some humans into killing the others.
What is interesting about this apocalyptic genre is that it explores what life might be like if civilization were to break down.
Desperate, afraid, hungry people can be rude, larcenous, and murderous. Some may revert to savagery. Others attempt to maintain more benevolent qualities.
Typically, in the movies, we are led to believe that our “‘human” nature – wherein we show courage, kindness and generosity – triumphs.
But it doesn’t always work out that way. And you don’t need an invasion from space to see it.
Win-win deals, otherwise known as “gentle commerce,” make us richer and better off. But win-lose deals (in which you win by making the other fellow lose) never go away. And occasionally, the win-losers take over.
Oesterheld, 1919-1976, imagined a grim situation. Giant bugs ate those who didn’t survive the snowfall. Or, they became prey to armed thugs and makeshift gangs.
In the 1950s, Argentina was still a rich society – with a GDP per capita twice that of Spain and thrice that of Japan.
But the government began a policy of “import substitution” (based on tariffs and other trade barriers) to encourage local manufacturing over foreign made products.
The idea was to make Argentina not just a great agricultural producer, but an industrial power too.
The policy resulted in inefficient industries and a decline in real wealth, with low-quality, made-in-Argentina products that couldn’t compete on world markets.
There were automobiles, for example, designed and produced in Argentina. You still see them occasionally – usually abandoned – on the streets of Buenos Aires.
The government later gave up on its “import substitution” policy, but prices rose, with lower real wages and more labor troubles. The inflation rate jumped to over 30% in 1965.
The government then imposed controls on prices and money movements. And the Argentine currency was devalued by 30% in 1970.
It was at this time, (perhaps not a coincidence) that hard-left groups – such as the Montoneros – grew in popularity, such that Oesterheld and his four daughters joined up.
This was in the mid-70s, when the generals began plotting their coup… the forces of law and order began planning to murder thousands of people… and Argentines’ troubles were soon not just financial.
Twenty years after Oesterheld’s comics first appeared, Argentina had its own post-apocalyptic moment.
Military leaders pulled off a coup d’etat in March 1976. Henry Kissinger reportedly urged them to get rid of their opponents as fast as possible… before public outrage could express itself.
And so began the “disappearances.”
An estimated 30,000 people were picked up by the police, the military, or civilian death squads. Many were tortured and killed, including Oesterheld and his four daughters, two of whom were pregnant when they were kidnapped.
Only one of the bodies was ever recovered. It is not known what happened to the unborn children. The army often let pregnant women give birth before killing them; the babies were given to childless military couples.
This was worse than a 10% loss in the stock market. It was the dismal, post-apocalyptic society that Oesterheld had foreseen in his Eternauta comic. People were killed, not by bugs, but by predatory humans.
Regards,
Bill Bonner