I am an investment advisor, working for a fairly substantial firm (as such firms go), that I helped my two partners organize more than twenty years ago. The compliance policies I myself enforce upon our employees – and, so, upon myself – do not allow me to discuss securities except under the aegis of our firm’s publications and website. The following, accordingly, does not constitute a recommendation or offer either to buy or to sell any security, or any type of security. Indeed, it does not even mention any security, whatever. It is not a discussion of securities.
So much for the preliminaries.
The astounding run up in economic statistics – financial markets, employment, manufacturing jobs, consumer confidence, business confidence, you name it (even the Fed seems fairly sanguine) – since the beginning of the Trump Administration have taken many analysts by surprise. But they are just what one would expect to observe at the end of a vicious cycle, and at the beginning of a virtuous cycle.
Not to give too much credit to Trump, mind. Vicious cycles can’t go on forever, and we were overdue for the exhaustion of the vice that overtook us in earnest beginning in the late 90’s, at about the time that we finally adjusted to the shocking fact that Soviet Communism was no longer an immediate threat to our continued existence – that it was, in fact, just gone.
Indeed, Trump has happened in part because things had reached a cusp, and were ready for such a man as he. There is a tide in the affairs of men, that cannot be credited to Trump. Notwithstanding that, Trump deserves an awful lot of credit. If nothing else, he has managed to take that tide at the flood. And that is no small thing.
There are vicious cycles of long and short term. A long term vicious cycle will be characterized by numerous temporary periods of diminished economic and moral (NB: because they both denote defections from the good, these terms equivalate, in practice) vitiation, and vice versa. Put another way, a culture that is experiencing a long term decline will nevertheless enjoy periods of economic boom, rather than suffering a long unmitigated economic bust. And vice versa. When things are looking better and better for a people over the long run, they may still find themselves in severe pickles from time to time over the short. Think of Rome versus Carthage. And when things are looking worse and worse for a people over the long run, they may still find themselves waxing geopolitically over the short. Think of Justinian versus the wayward Visigothic provinces of North Africa – and, a fortiori, the looming threat to those incredibly rich and fertile lands posed (who could possibly have foretold it?) by the pagan savages of the Arabian hinterlands.
Long term decline need not moreover utterly pervade a culture. It is rare that just everything is getting worse and worse. On the contrary, it is almost always true that some things are getting better and better, even as things in general decline; and vice versa. E.g., the increase in social chaos since 1968 has been accompanied by tremendous technological advances. In many ways, life is much better for most Westerners than it was in 1950, despite the fact that in other, deeper ways, it is horribly worse.
A people can harvest bumper crops year after year even as the barbarians encroach upon them ever more and more. Indeed, there would seem to be a straightforward positive correlation between repeated bumper crops and vulnerability to predation. As bank robbers rob banks because that’s where the money is, so nomadic raiders invade prosperous poleis because that’s where the prosperity is. And wealth coddles, thus weakening. Rich prey are usually soft.
None of that is controversial. No more likewise is it controversial – or, rather, no more ought it in plain common sense to be controversial – that there can be brutally hot summer days even during the onset of an Ice Age.
From my perspective as an ill-read amateur economic historian, it looks as though the West has been in a long term economic and moral decline since the end of the Belle Époque in 1914 or so.
That statement wants a word of explanation. An economic decline since 1914 or so? Is that not rather a mad thing to suggest?
Not at all. The question is not whether the present wealth of the West is massively greater than it was in 1914 – it most assuredly is – but rather whether our present wealth is as great as it would be, had we not in 1914 or thereabouts begun a precipitous descent into *moral* confusion and error. We are much wealthier and more powerful than we were in 1914. But we are much less wealthy and powerful than we might have been, had we made better decisions.
The Arabs, too, after all, are much wealthier and more powerful than they were in 1914; so are the black South Africans. That this is so does not mean that they could not have been far wealthier and more powerful than at present they are, had they not adopted policies more apt.
The roots of our decline lie of course much further back in our history, but never mind that for the nonce. We might date its beginnings somewhat earlier – 1860 suggests itself, as so do 1840 and 1789 – but, again, never mind.
We’ve had a ton of history since any of those dates, obviously, and many of both booms and busts. But mostly that’s been weather, rather than climate.
My concern in this essay is not to ascertain when our long term decline began, or exactly why, but rather simply to wonder: what might we expect if that decline were suddenly to come to an end, and things were to flip back suddenly to a regime of incline? What if things stopped getting worse and worse all the time, with here and there a light of bright hope shining amid the prevalent deepening gloom, and instead started getting basically better and better all the time?
There’s really no way to tell. Almost all our information about the way economies and markets behave dates from the early 20th Century. We don’t have any idea what it is like to live in an economy where things are getting systematically, fundamentally, organically better. All our statistics tell us what it is like to live in an economy where things are getting better and better in this or that respect (GDP, disposable joules/capita, caloric surplus, input bits/decision, and the like), amid a context of overall moral and (therefore, as night follows day) hedonic decline.
Excursus: hedonic decline can worsen even as objective measures of wealth improve.
A hedonic decline *just is* an economic decline.
Excursus: the proper term for a unit of economic value is not the “utile” now prevalent among economists, but “hedon.” The former is, after all, a mere adjective, while the latter is a noun. That consideration alone should be dispositive.
I realize that I am in this asseveration controverting the main current of custom. This, in just the way that I insist that the neoreactionary “Cathedral” should properly be replaced with “Moloch,” and “manosphere” with “androsphere.”
So be it. What’s right is right. I can’t argue with what is right. Where custom is inapt, so is it damned.
What this means is that all our inditia of economic overheating – which more and more foretell an economic contraction as things get better and better – are predicated on a milieu of general cultural decline. In a milieu of cultural, economic, moral and (so) hedonic incline, they are mere noise.
Excursus: e.g.: when things get better because the friction imposed upon commercial operations of compliance with regulation drops systematically, the pressure on the real factors of production is zero. No, that’s wrong: it’s negative. A reduction of regulation does not only reduce accounting and economic costs, it liberates factors of production from absorption in the tasks of compliance so that they can be allocated to the generation of value. A dollar of savings on compliance expenditures is worth at least two dollars of increased production of value.
Thus there is no way we can tell how good things might get if America began to be Great Again (to take only the most famous example of this phenomenon of cultural resurgence now more and more evident throughout the West (including Russia (of course))), before operations began to overheat and slow themselves, prompting a correction.
In a milieu of general hedonic incline, wherein things are getting more and more proper, correct, and righteous, each good development sets the stage for yet better developments.
In such a situation, the better things get, the better they can then get.
To put it bluntly, and in the simplest terms: in a milieu of general hedonic incline, the sky is the limit. Nothing grows to the sky, of course. There will certainly be a correction, sooner or later. But there’s no point in trying to figure out where that correction might be based on econometric statistics derived from a milieu of moral decline. And our notions of the limits of economic prosperity founded upon statistics derived from a milieu of general moral decline can have nothing to tell us about what it might be like to live under conditions of general moral incline.
Think of that; let it sink in. The limit of our present economy is not set by our experience with the Carter administration, or the Obama administration, or even the massively bullish Clinton and Reagan administrations. The limit of our present economy is set by the sky.
Not to wax all Polly Anna, of course. No one is so jaundiced as an investment advisor who has survived the crashes we’ve all suffered since 1985. I speak as such an one; as a jaundiced, cynical, generally bearish sort. All sorts of things could derail us. It’s lots easier to screw up than to get things right.
Still. Still. Perhaps best not to bet on catastrophe; perhaps best not to bet on total cultural collapse. Not just yet, perhaps.