Doom, Gloom and Optimism

--“I’m not interested in blind optimism,” author Colum McCann once wrote, “but I’m very interested in optimism that is hard-won, that takes on darkness and then says, ‘This is not enough.’”

Despite all the doom and gloom we’re bombarded with on the daily, we ask, are there any good reasons to stay optimistic?

We say yes.

We’re lucky enough, we believe, to live in one of the most exciting times in human history. For several reasons. A few of which we’ll go into today.

For one, the average person is creating more “things” and making new discoveries than ever before in history — online and off of it.

And with the help of global interconnectivity (and the ability to travel on the cheap), never before have we had so much choice and ability to chase, and be fulfilled by, our preferred physical, intellectual and/or spiritual pursuits. And, not to mention, find our “tribe” of like-minded people to share our passions with.

Yes, there’s plenty wrong with the world. So much, you could spend the rest of your days finding reasons why our situation is irreparable, and never run out of material to worry about.

But today, in “section one” of today’s episode, we’ll fight the Negative Nancies and look at 3 Reasons to be Hopeful, with Lew Rockwell.

On the other hand, of course, we’re far from Pollyannish. We’re fully aware that not all is sunny, shiny and cat videos. The squealing, grinding gears of the economy, for one, are beginning to ring the ears of even the elite from “up high”.

Which is why, in “section two,” you’ll be treated to our lesser-optimist in 3 Reasons to be Worried About the Economy, with Yonathan Amselen.

Let’s begin…

3 Reasons to Be Hopeful

ONE: The Incorrigible Indignance of Living Standards 

Living standards is a definite reason to be hopeful for the future, says Lew Rockwell in a recent talk titled 3 Reasons For Hope.

“Whether it’s child mortality, caloric intake, living space, environmental quality, life expectancy, real income, or many other contributions to human well-being, the movement has not only been up, but dramatically so.

“Now, our material standard of living isn’t everything, but it sure is something.”

Consider, Lew goes on, that in the England of the late-19th century, the differences between the rich and poor were stark. Not only were the classes clearly different in order of income, but also in terms of life expectancy and even height. The rich lived 17 years longer than the poor and were a full five inches taller. Today, that discrepancy has been reduced to two years and less than a single inch.

In the U.S., material progress has been so great that the incomes of the average poor in 2000 would’ve placed them in the top 5-10% of all households in 1900.

“If you think there hasn’t been progress in the past generation or so, ask yourself if you’d like to go back to 1977 with the manual typewriter, those gigantic, heavy televisions with three channels, cars without air conditioning, not to mention no Internet, no instant communication with anyone anywhere in the world, and no access to the great literary and scholarly achievements of mankind at the push of a button.

“So that’s an obvious one,” says Lew. “Obvious in the facts. Obvious in the implications. Human beings continue to live better and better, despite all the best efforts of the state.”

But not only are we living better, we’re also much better informed than our predecessors. Which leads us to Lew’s second reason to be hopeful…

TWO: The Coming Death of the University Unisaurus

“As long as liberty has fought against power,” Lew says, “it has been at a decided disadvantage. In one way or another, the state has dominated the molding of opinion. This is an essential state activity. Because it is the way the population is indoctrinated into the need for, and consequently made amenable to, the exercise of state power.”

As Murray Rothbard described it:

In the 20th century, the church has been replaced in its opinion-molding role, or, in that lovely phrase, the ‘engineering of consent,’ by a swarm of intellectuals, academics, social scientists, technocrats, policy scientists, social workers, journalists and the media generally, and on and on. Often included, for old times’ sake, so to speak, is a sprinkling of social gospel ministers and counselors from the mainstream churches.

So, to sum up: the problem is that the bad guys, the ruling classes, have gathered unto themselves the intellectual and media elites, who are able to bamboozle the masses into consenting to their rule, to indoctrinate them, as the Marxists would say, with “false consciousness.”

But that is clearly changing. The cracks in the established institutions of thought are beginning to show.

“The university itself,” Lew says, “is a dinosaur. Propped up by social inertia and government subsidies. The last thing we should want is to make it free.”

Even if Bernie Sanders’ plan of making college free did come to fruition, it would only drive the stake deeper into the educational system as we know it today.

The epicenter of “higher learning” has become, and for good reason, the butt of a whole lot of hilarious jokes. It’s expensive. It’s divisive. It’s impractical. And it’s increasingly surfing the gnarly wave of obsolescence.

That’s because the university of the future, says Lew, will be three things: scholarly, high-tech and cheap.

The Khan Academy, for example, a free “learn anything” website, is the poster-boy for the new virtual-ed movement, and all the proof we need that there’s demand aplenty for alternative education.

And this trend is nothing exceptionally new:

“More than 2 million users watch his videos every month,” a Wired article reported back in 2011, “and all told they answer about 15 questions per second. Khan is clearly helping students master difficult and vital subjects. And he’s not alone: From TED talks to iTunes U to Bill Hammack the Engineer Guy, new online educational tools are bringing the ethos of Silicon Valley to education.”

“With technology pushing the price of instruction dramatically lower,” Lew concludes, “what reason will there be in the future to shell out upwards of $60,000 a year for the privilege of being intimidated and propagandized?”

Indeed. 

THREE: Mind-Molder Meltdown in Mainstream Media

Speaking of propaganda, the established, mainstream talking heads are taking an even bigger blow than the universities.

All major mainstream news sources are seeing their numbers shrink year after year.

Now, on the surface, this might, in the grand scheme of things, seem obvious and not such a big deal.

But, think about the amount of 100% independent news sources (ours included) you have access to today, compared to, say, twenty years ago.

Two decades ago, the traditional function of the vast majority of existing media was, in Lew’s words, “to limit the extent of permissible debate. And to promote the regime’s official narrative about current events.”

Today, because we have access to so many diverse opinions, the “official narrative” no longer has the same power over the minds of America it once had.

And that’s something to be very hopeful for.

Whenever you become discouraged, says Lew, “remember that the state’s monopoly and the opinion-molding function is weaker and more vulnerable than it has ever been. This is a development few could have predicted.”

--But, we ask, are these enough? Was Voltaire right when he said that “Optimism is the madness of insisting that all is well when we are miserable”?

In a moment, we’re going to ask your opinion. Are you optimistic about the future? Or are you worried? What specifically makes you optimistic or full of dread for the days to come?

Before you answer that, though, now that you’ve seen three reasons to be hopeful, let’s balance the scales and move to “section two” of today’s episode. Here are three reasons to be worried about the economy with Yonathan Amselen.

Read on…

3 Reasons to be Worried About the Economy

By Yonathan Amselen

On January 12, America’s central planner-in-chief gave his State of the Union address. The president promised nothing less than to feed the hungry, create jobs, shape the earth’s climate, and make everyone a college graduate. There’s nothing new here, though. We’ve heard variations of this silly song and dance every year under both Democrats and Republicans.

The president lambasted naysayers as fear-mongers that were too partisan to admit we have a booming economy. The fact that the Dow Jones cratered roughly 9 percent in the same thirty-day period President Obama gave his address did nothing to quell Obama's optimism about America’s future. In fact, he labeled the US economy “the strongest and most durable in the world.”

Despite our leader’s unwavering confidence in America’s fortunes, a quick peek under the hood reveals a pretty grim state of American commerce.

1. The Federal Reserve and US Government Have Warped the American Economy

In just the past decade, the Federal Reserve’s balance sheet has grown from roughly $800 billion to over $4 trillion. Our central bankers engaging in massive asset purchases to pummel interest rates downward is not news to anyone. We’ve been living in a world of falling interest rates since the 9/11 terrorist attacks. Yet, few mainstream economists have taken a good look at the destructive effects of this unprecedented monetary expansion. The calamitous distortions Fed policy has created for actors on both Main Street and Wall Street since 2008 have laid the groundwork for yet another crash.

Low interest rates stemming from a growing money supply are the only reason the US government has managed to service its gargantuan debt in recent years. The Congressional Budget Office itself has pointed out that even a slight rise in interest rates could potentially result in anywhere from $700 to $900 billion in annual tax payments just to service the interest on our debt. At this pace, paying the republic’s creditors will become our largest government program in no time. Future Americans might go to work and have 50 percent of their paychecks seized not to pay for government services, but simply to service debt forced on them by central planners.

But public debt is far from the only distortion artificially low rates have wrought. Mortgages, auto loans, credit cards, and student loans have ballooned total consumer debt to $12 trillion, and this number is only trending upward. 

The easy credit economy manufactured by central bankers has obliterated American savings and replaced them with debt. The average American consumer has less than $1,000 in his bank account. He lives praying for no car trouble or a broken arm. There was a time when Americans were rewarded for saving their earnings with double-digit interest rates but this is a distant memory. If Americans want to earn a return nowadays they must play the central-bank sponsored stock market casino. In fact, calling the stock market a casino is a little insulting to casinos — at least Blackjack has consistent rules.

2. American Corporations Are Debt-ridden and Unproductive

The post-recession bull market inspired a lot of confidence in the American economy and Obama’s recovery, but this is akin to praising great happy hour specials on the Titanic. Soaring stock market prices are not a result of increased productivity or innovation — they are a symptom of central bank fueled asset inflation and corporate debt. In fact, since 2008, corporate debt has doubled. Almost 100 percent of all corporate issued debt has been used to buy back stocks and prop up equity prices. This bears repeating. Almost none of America’s recently issued corporate debt has gone toward investing in plant and equipment, increasing the workforce, research and development, or expanding operations in any meaningful way.

Our central bankers, regulatory agencies, and fiscal policies have created a financial system so distorted and removed from real assets and real cash flow generation that corporate executives can rake in billions in bonuses while producing almost nothing of real value. Investing in the real American economy is just not worth the risk. The massive long-term obligations assumed by American companies high on low interest rates will slowly crush the life out of our economy. The only answer is to start producing real goods and begin generating real cash flow. But this won’t happen in the bubble-finance nightmare cycle we’re now in.

Our current money commissar, Janet Yellen, recently “raised rates” from 0.25 percent to a paltry 0.5 percent. If this rounding error of a rate hike can send the market tumbling off a cliff, what would happen if the fed raised the target rate back up to 6 percent like in 2000?

3. American Entrepreneurship is Dying and American Workers Are Unproductive

Financial chicanery aside, we have to come to terms with the fact that Americans themselves just aren’t built like they used to be. President Obama’s administration constantly cites low unemployment as a sign that our economy is back on track.

To say unemployment numbers are massaged is an understatement. Of course unemployment recovered since 2008, President Obama was sworn in at the end of a market crash!

But more importantly, the American economy is not producing architects, engineers, machinists, or other high value, goods-producing workers. We are pumping out an army of waiters, social workers, and associate professors with worthless six-figure degrees they have no hope of paying off in this life or the next. American workers are not interested or encouraged to start businesses, learn new skills, or innovate in some way. The typical American graduate firmly believes he can turn a six-year sociology degree into a job that doesn’t involve bringing people mimosas for brunch.

Our unproductive workforce is not all the fault of its members.The disincentives for entrepreneurship and wealth creation are colossal in this country. Dealing with licensing boards, zoning commissions, health inspectors, unions, and other regulatory bodies at the federal, state, and municipal level is extraordinarily burdensome, particularly for the poor and nascent immigrants.

Successful entrepreneurs then have taxes levied at the federal, state, and local level across a cavalcade of confusing forms and attachments. The state and its many institutions make it nearly impossible for the average American citizen to just try something. This is the lifeblood of a “durable economy.” Unfortunately, business failures are now outpacing business startups.

The political class has completely disrupted the American structure of production, made American workers uncompetitive, snuffed the life out of entrepreneurs, and burdened the entire nation with a debt obligation the size of Jupiter. The US economy is not the strongest and most durable in the world — it is an unskilled thirty-two-year-old waiter crashing at his parent’s place and trying to pay down an $80,000 international relations degree.

[Ed. note: So which is it? Are you hopeful or hateful? Does the future excite you or scare you to no end? Be specific. Why do you feel this way and what does the future look like to you? Email it: Chris@lfb.org.]

Until tomorrow,

Chris Campbell
Managing editor, Laissez Faire Today

P.S. Have something to say? Say it! Chris@lfb.org.

Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to SilverDoctors.com.