Special Election Issue

A presidential ticket with three drunk driving arrests can’t be all bad.

We have the news of Mr. Bush’s brush with the law thanks to one quick-thinking member of the electorate…a Mr. Tom Connolly. The Maine Democrat was worried that “Bush could relapse” and felt it his duty to reveal details of an arrest that occurred before the Spice Girls were born.

But no sooner were the chattering classes set to their labors when the news broke that the number two man on the Republican ticket also had had his problems with demon rum. Mr. Cheney admitted that he had been arrested not just once – but twice – for DUI.

Mr. Gore, meanwhile, proving that sobriety is no sure defense against imbecility, has let it be known that he has successfully avoided arrest all his life.

Drunk driving is not the threat that people think it is, and certainly much less a threat than that posed by the political process itself. One study I recall determined that a middle-aged drunk was less likely to have an auto accident than a 70-year-old woman or an 18-year-old boy. Mature drunks weave, but they tend to drive very slowly and cautiously – realizing that their abilities are impaired.

But the nation is indebted to Mr. Connolly. Were it not for his keen sense of civic responsibility, none of this might have come out and we would have been forced to make our presidential selections on the basis of incomplete information. Indeed, just about all we really know about the candidates – aside from the empty slogans and campaign promises are the little details that slip out from time to time unbidden, like change under a seat cushion.

Mr. Gore, for example, was told by his father to clear a 20-acre section of land with only a hand axe and brush hook. This biographical flourish was supposed too enhance Mr. Gore’s reputation for grit and determination. But it makes you wonder about the man’s judgment. Clearing land by hand is a very inefficient way to do it. If young Al had had any sense or gumption he would have demanded at least a chain saw or bush hog. Instead, the future vice president merely did as he was told, like a Chinese coolie hauling dirt in a basket.

Of Mr. Bush we know similarly little. His chief virtue seems to be that he knows a NY TIMES reporter when he sees one.

And now that the long season of hard campaigning is over…the debates have past…the fortunes have been spent to convince voters to `get out and vote’ for one candidate or the other…the climactic moment finally arrives, tomorrow, when we discover by whom we will be robbed, bossed around and insulted for the next 4 years.

Will it be – as the media have cast them – the moron or the robot? Which essential body part are we able to do without in a president – a mind or a heart?

Thus, dear reader, do we see the full quackery of the Information Age. We have access to all the information we could possibly want on the two candidates. We know where they went to school, what they’ve done with their lives…even with whom they’ve slept. And yet, we know nothing. We lack even the basic terms and ideas with which to understand the election itself…and how these two defective characters – whose programs are only marginally different – could be the only choice of an electorate numbering more than 100 million.

It’s not information we lack – it’s insight and wisdom. People have so much faith in American democracy that they are unable to see the farce it has become.

Coming back from a restaurant in Baltimore a few weeks ago, I noticed a whole group of posters hectoring people to vote. One showed a picture of a 60s era U.S. army helmet with bullet holes in it. The preposterous message: that soldiers died in Vietnam so you and I can vote for Bush or Gore. I know a lot of guys who went to Vietnam…and some who died there. I guarantee that the idea of defending the U.S. electoral system from the Viet Cong never crossed their minds.

Every one of the people with whom I was walking said they did not intend to vote. Smart, educated, well-paid people – and yet they didn’t consider it worth their while to cast a ballot.

Americans can read the election coverage in the papers. They see the candidates on TV. They may believe in `democracy’ in the abstract. But when they see what actually happens, they know it is not worth their while to get involved.

Ralph Nader, trailing in the polls but with an unbeatable lead in humbuggery, seems to reject the whole concept of centrist politics:

“Don’t vote for the lesser of two evils,” says St. Ralph, the patron saint of tort lawyers, “because at the end of the day, you end up with evil.”

The New York Times and the Washington Post are mad at Nader. “Spoiler” they call him. People voting for Ralph are `throwing their votes away,’ say the great liberal oracles.

Voters can see that the whole spectacle is phony…but they lack the terms to understand it. Even with the Internet at their fingertips – it seems impossible to gain a clear idea of what the election is really about or what it really means.

Neal Gabler, writing an unusually sensible editorial in the International Herald Tribune describes the dumbing down of national politics as a feature of mass communications:

“The arrival to television and the televised debates, which enabled candidates to reach the electorate directly, forced the media to redefine their coverage,” he says. “What has emerged is something suspiciously like celebrity reporting. Candidates’ personalities are analyszed and their life histories exhumed as if they were movie stars. Again, like stars, they are judged by whether they exceed or disappoint the expectations that the media have created for them.”

Mr. Gabler describes the positioning of the candidates as a “narrative” created by the media…as though the election were a sporting event.

“Because the candidates fully understand that this is the media’s obsession,” he observes, “and because the media, through repetition, largely govern how the rest of us think and feel about the candidates, the narrative actually drives the entire electoral process now.”

So who will you vote for? Brainy Spice or Friendly Spice?

Beneath the media’s narrative is the logic of democracy. A recent survey revealed that the average amount of tax paid in the U.S. is about $7,500. Seventy percent of taxpayers pay less than that amount. And those earning under $10,000 pay only 4% of their incomes in tax, while those earning more than $500,000 pay nearly 30% to the government.

Relatively few people earn more than $500,000 per year – not enough to elect even a county executive. But a lot of people hope to earn $500,000 and they’re smart enough not to want to destroy the dream of great wealth. And many voters have a sneaking suspicion that that people are better off generally if the most successful among them are not routinely and ruthlessly plundered.

Politicians need to position themselves as close to the point of balance as possible – the point where the most money can be squeezed out of people for the benefit of the largest possible number of voters. The leading candidates take up their posts on either side of the balance…close to the margin. Both are candidates of the status quo – since the balance point changes little from year to year. Thus, the evil choice that they offer is similar to a pair of criminals who break into your house at gunpoint and allow you to choose: one will take 29% of everything you earned that year. The other will take 31%. Choose one or the other and you become party to your own expropriation.

The Washington Post and NY TIMES hector their readers to vote – lest the 29% candidate carry the day. And Republicans are reminded that if they stay home on election day, or vote for Harry Browne, the Libertarian candidate, it could cost them thousands of dollars, too. And so, they are all drawn into the politics – all made accomplices to an act of larceny and absurdity.

Sigmund Freud, you will recall, explained the Germans’ attitudes at the end of the two world wars on the basis of how much they identified with their leaders. German troops abandoned the Kaiser when the going got tough. But they stood by the Fuhrer when the going got really tough. The difference was that the Fuhrer was elected, Wilhelm was not. Between WWI & WWII Germany discovered democracy. Mass thinking, mass media, and mass democracy had replaced the quirky independence of the House of the Hohenzollerns. The Germans had ceased being subjects of unelected monarchs and had become citizens of nation whose leader they elected, and with whose fantasies they fully identified and largely cooperated.

In Germany, as in America, as voting spread so did mass media, mass thinking, and mass self-delusion.

Your correspondent,

Bill Bonner

Koln, Germany (Or There Abouts) November 6, 2000

*** The stock market seemed dull towards the end of last week. On Friday, for example, the Dow finished down 62 points. The Nasdaq went up 22. Investors seemed to be waiting for something to happen.

*** Financial reporters are desperately trying to gin up some excitement about tomorrow’s election. Analysts have been quoted saying that investors have been sidelined by the uncertainty of the elections and are waiting until Nov. 8 before a beginning a strong year-end rally.

*** Well, maybe…but why wait? What’s the uncertainty? What difference does it make? Possibly Bush would be better for tobacco and defense stocks…but possibly not. Gore’s spending promises actually include more money for defense. And the federal government is no longer a big buyer of tobacco products in any case. More on the election below…

*** Apart from the elections, the other big event is Cisco’s earnings announcement scheduled for today. Most likely, Cisco will report satisfactory figures. Sales have been growing at 30-50% for years. But the sharp analysts may detect some flaws in the Cisco Kid’s picture. Telecoms are among Cisco’s most important customers and the industry has gotten very soft in recent months. Other suppliers – such as Nortel, Lucent and Copper Mountain – have been already been crushed.

*** Nortel, too, has been growing at 42% per year…but that didn’t stop investors from marking down its shares by nearly that same amount.

*** Cisco has a $400 billion market cap – equal to 20 times sales. At that price, at least one analyst claims that it is “severely undervalued.” Meanwhile, a headline in the International Herald Tribune last week claimed that investors are “Going Back to Value.” They will have a long way to go before they find value in Cisco.

*** The Nasdaq gained 5% last week. The Dow ended the week up 2%.

*** Taking the week as a whole, there were 2398 advancing issues on the NYSE and only 904 declining ones. 248 hit new highs; 138 hit new lows.

*** Labor costs increased 6% in the 2nd quarter. One of the miraculous features of the miracle U.S. economy was its ability to avoid inflation by getting more than enough additional output from workers to cover increases in salaries. That didn’t seem to happen in the most recent quarter. Productivity only increased by 3.8%.

*** King Dollar may have topped out. The ECB intervened, suddenly and without much effect, on Friday. Still, the dollar index fell to 114.05 and the euro rose to nearly 88 cents before falling back under 87 cents. IF the dollar is now falling, it marks the beginning of the end for the economic boom that began ten years ago. It also would be an important milestone along the path of retreat for the stock market boom than began in 1982…and turned into a bubble in 1998.

*** Why hasn’t the weakness in the market leaders led to a general market collapse (yet)? “First of all,” writes John Mauldin, answering the question I posed on Thursday, “the Bull Market of the past few years was a very narrow bull market, largely missing the vast majority of the market. Excluding the technology sector, the S&P 500 Index has been in a flat trend for two years. The Technology Sector of the S&P 500 is up almost ten times since 1992, which has largely fueled the bull market. For the last 8 years ending in 1999, transportation is up only 75%, utilities were up less than 50%…”

“In addition, the S&P 500 dumps the loser stocks and adds winners on a regular basis (as does the Dow). Companies which are going down are removed from the Index, so the bias is upwards. The tech component of the S&P 500 is 50% bigger than 10 years ago.

“As of a few days ago, the S&P was down 7% for the year, but the tech component was down 21%. Due to the heavy weighting of the tech sector in the Index, the biggest portion of the recent decline is due largely to the tech sector.

“One is almost tempted to ask, ‘What Bull Market?’ The market in tech stocks was not a bull market, it was a momentum driven mania/bubble market frenzy. But because it was a component of the overall market, it masked the malaise in the rest of the market.

“…the out of favor Old Economy stocks went nowhere price- wise. Now, however, since the first of the year technology, communication, basic materials and consumer cyclicals are all down between 20-30%. The rest of the market is doing just fine.

“What will cause a general bear market in all stocks?” John asks. “A recession.”

*** But a recession is just what you get when the `wealth effect’ turns negative. A decline in stock prices alone can trigger a slowdown as households cut back on spending to offset losses in their stock portfolios.

*** “The established euphoria continues to prevail among consumers, businesses, investors and economists,” wrote Dr. Kurt Richebacher recently. “The consensus keeps expecting a continuation of the economy’s stellar performance. The U.S. economy is expected to show its strongest growth since 1984 by the end of this year, while the interest cycle has peaked…”

“We repeat,” he continues, “was we have said many times before: It will come as a great surprise how fast the U.S. economy will weaken within the near future…it’s five minutes to twelve.”

*** As I have been saying, the benefits of connectivity, bandwidth plenty and the Information Age are greatly exaggerated. Even Bill Gates agrees: “the world’s poorest 2 billion people,” said the richest man in the world, “desperately need health care, not laptops or Internet connections or a bridge across the digital divide.”

*** Addison and I are attending a writers’ conference in Germany. I arrived late last night by train and stepped onto the platform where I discovered that everything was closed. Only one other person got off with me. She turned out to be one of the few people in Germany who speak no English or French. But she pointed me in the right direction and I arrived at the hotel a few minutes later.

*** My week’s semi-holiday for All Saints was less than blissful. The weather was mostly bad. The family was fractured with various agendas that didn’t match. And I got in the middle of the bitter 20-year-old feud between Francois and Pierre when I invited Francois to cut wood along the entryway. “He is going to cause trouble,” Pierre warned, practically shaking with emotion. Now that Francois is retired, Pierre can’t bear seeing him around the farm.