Charles’ Note: “The horror! The horror”
I read Joseph Conrad’s Heart of Darkness 20 years ago, but I still keep a copy on my bookshelf as a reminder of what unchecked power can do to an otherwise civilized person.
For the movie buffs out there, Francis Ford Coppola’s 1979 masterpiece Apocalypse Now is an adaptation of Heart of Darkness set in the context of the Vietnam War.
In both stories, Kurtz, an idealistic, “enlightened” Western man, ventures into the wild to bring civilization to the savages. But rather than import modern sensibilities, he goes native.
Far from home, isolated, and with no society to restrain him, he gives in to his darkest impulses. He becomes a tyrant and establishes a cult around himself.
It goes about as well as you might expect. He dies a broken man. His last words, a delirious ramble: “the horror… the horror.”
Our leaders may not be engaging in human sacrifice like Kurtz. But they seem to have the same God complex.
As Ronald Reagan summarized the government’s impulse: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
That sums up the Democrat platform. Substitute “tariff” for “tax,” and you sum up the Republican platform. In both cases, you have “enlightened” know-it-alls pretending they know how to run our affairs better than we do.
Perhaps worse, they’ve lost even the basic concept of shame.
With no real consequences, they spend us ever closer to bankruptcy without the decency to even pretend to be concerned about it.
How does it all end?
We’ll know soon enough.
But to help me make sense of it all, I turn to Bill Bonner for guidance. I’ve personally been reading Bill’s work for a quarter century. He’s been navigating the chaos and connecting the dots for longer than I’ve been alive. And he has a way of putting things into perspective better than anyone.
Take it from here, Bill!
Heart of Fiscal Darkness
We’re gonna have growth like we’ve never seen before.
– Donald Trump
Growth! Growth! Growth!
More jobs! More income! Abundance! Joy, from coast to coast!
We know we’re on the road to joy when we see the GDP numbers. They’ll tell us when we’re getting what we want – more of everything.
The two parties agree about it… and come closer together. With the advent of the new “abundance” doctrine, growth is the Jehovah now worshipped by the Democrats. The Republicans regard it as their Yahweh too – ever since the virgin birth of “supply side economics” in the 1970s.
The Senate passed a version of the Big, Beautiful Budget Abomination (BBBA) on July 1, with the Vice President casting the tie-breaking vote.
Reuters:
U.S. Senate passes Trump’s sweeping tax-cut and spending bill, setting up House battle
This Senate version goes even further into the heart of fiscal darkness than the House version. The numbers are fishy, but it looks like this will add $26 trillion to the nation’s debt by 2035.
“Don’t worry about it,” say the Republicans. “Growth will make the debt irrelevant.”
Today, we pause to wonder about it.
Is “growth” a false god?
In preview, what we’ll see is that the feds can produce “more” of just about everything – even more money itself. But what they can’t produce is real growth.
The statistics are misleading… or outright frauds. Falling unemployment is taken as a “good” thing, for example. But it doesn’t mean that people are better off. And it doesn’t tell you whether they are doing anything worth doing, or not.
The Soviets had full employment, by forcing people to dig canals with picks and shovels. The U.S. could have full employment too, perhaps by digging a giant canal between Mexico and the U.S. – thus “solving” two non-problems at once!
The Soviets also showed that they could produce as much “growth” as they wanted simply by raising production quotas.
Factory managers took their orders from bureaucrats, not from customers. They were rewarded or punished based on production targets.
A factory manager might get a pat on the back depending on the nails he turned out, measured in pounds. Easiest for him might be to produce huge, heavy spikes, which no one wanted.
Then, the Gosplan geniuses could change the compensation arrangement to give bonuses based on the number of nails, rather than the weight of them. Managers could then switch to turning out millions of tiny tacks… which, again, no one wanted.
This is the core problem with all government projects. We only know if things are worth doing when and if people – of their own free will and with their own real money – pay for them. Otherwise, the transaction is likely to be a scam or a mistake.
Ultimately, citizens pay for all of the feds’ bamboozles. But the signal from voters to federal spenders passes through so many lobbyists, grifters, statistical illusions, and big money political donors that it loses its “information content.”
And even if the voters approve of the spending program, they’re only better off if it produces a real gain.
This is the challenge for private industry too.
If a hunter expends 2,000 calories catching a rabbit with only 1,500 calories of meat… he is worse off. If he continues with this math, he will die of starvation.
Likewise, an enterprise – public or private – that applies $100 worth of time and resources to provide a service worth only $99 has not only lost money… it has made the world $1 poorer.
On the evidence (as well as the theory), it’s almost impossible for central planning hacks to keep costs down and produce a real gain for the taxpayers. Even programs that seem to make sense run over budget… and get delayed and distorted.
Thanks to the Fed’s fake interest rates… and state and federal regulations, for example, housing prices have roughly doubled in the last 10 years, while wages rose only about 50%. This has put the average house out of reach for the average household. Another crisis!
What to do about it?
More “abundance”… more supply side… more growth… more houses?
California’s “affordable housing” initiatives may cost as much as $1 million per unit. That’s growth! But we will all be a little poorer as a result.
Regards,
Bill Bonner