A Prediction for the Next 100 Years
We’re only two days from the end of the 1900s. It is not technically the end of the century or the millenium… but who cares. It’s a milestone.
Besides, centuries are given definition by what happens, not by the passage of time alone. Thus, the 20th century began not on the 1st of January, 1901… but 13 years later, when a Serbian anarchist, G. Princip, shot the archduke Franz Ferdinand, a member in good standing of the House of Hapsburg.
The Hapsburgs were the titular rulers of the Austro- Hungarian empire, when the anarchist decided to take politics in his own hands. He thought he might deliver a decisive blow to the Hapsburgs, and thus bring about independence for Serbia.
If ever we were moved to think about what has happened during this century, the next 48 hours might be a good time to do it. In these letters to you, I have been exploring the similarity between political thinking and the kind of mob-thinking you get in a market mania.
George Soro’s remark, that market trends are based on falsehoods and lies… and that manias collapse when the false premise is discredited… invites another discussion.
The burden of today’s letter is that most of the popular discussions of politics — as discovered on the editorial pages of the Herald Tribune — are as full of falsehoods and lies as the Nasdaq 100. Eventually, these falsehoods, too, will be discredited. And when they are, the democratic nation states, which are believed to be the crown of political creation, will either collapse… or at least downsize.
Which brings me to my Major Prediction for the Next 100 Years:
Politics — which has flowed so bountifully these last 80 years — will begin to ebb.
(I will leave it to you to figure out the investment possibilities. Personally, I would not be loading up on suburban Washington, DC, property. That was a great investment in 1950 — a half a century ago.)
Princip was right. More or less. His blow was decisive; more than he had imagined. He began the process of snuffing out the dynastic empires that had been a feature of Europe for centuries. This marked the frontier between the 19th century and the 20th.
The Hapsburgs fell. Soon, the best families in Europe were in trouble. The Hohenzollerns, the Prussian-based family that ruled Germany, were booted out. And were the Ottomans of Turkey. Most spectacularly, the Romanovs — Sovereigns of Great Russia and most of what was to become the Soviet Union, and first cousins of Britain’s royal family — collapsed. The whole first family was taken prisoner by Bolshevik mobs, shot, thrown down a well, and doused with acid to destroy the bodies.
Princip was wrong too. He thought knocking down the Hapsburgs would be a good thing for Serbia. Not so. The Hapsburg yoke had been light. Taxes were negligible. You could say pretty much anything you wanted — the Hapsburgs wouldn’t understand. They didn’t speak the language. Most people in Serbia were only dimly aware that they were part of the Hapsburg’s empire anyway. Austria was a long way away in more ways than one. Life in Serbia went on without much interference from Vienna.
But the world changed a lot since Princip pulled the trigger on the archduke. Serbia got caught up in two world wars… then was incorporated in the Yugoslav empire. About 10 years ago, Yugoslavia broke up — and Serbia has been fighting with its neighbors ever since.
Instead of being free to do what they wanted under the Hapsburgs, the Serbs managed to bring almost every aspect of their lives under the control of their own despots and incompetents. Serbia went from being a place where politics was a minor nuisance… to one where it was life threatening.
The New York Times ought to give Princip a medal. Richard Cohen calls him a "terrorist." But it was he who began the work of the century… the work the TIMES so admires — politicizing the whole world. Every problem is a political problem to the TIMES. Every solution is a political solution.
The TIMES thinks the destruction of empires was a good thing. "For all the strife at the dawn of the new millenium," states an editorial from last week, "one enduring source of conflict may be receding… the earth’s empires have disappeared."
Princip, after all, just wanted what Americans already had — the right to be misgovered by people who spoke the same language. Jefferson had described it as a "self-evident" right — the right to determine who your rulers are to be. Woodrow Wilson attempted to make it a cornerstone of the new world order. He and Ambassador Marburg envisioned following the war — the right to self-determination.
Wilson’s secretary of state, Robert Lansing, was shrewder. "It will raise hopes which can never be realized," said he. Not only that, they were hopes that rulers — no matter what language they spoke — had no interest in fulfilling… not even America’s rulers, as Jefferson Davis discovered.
The whole idea of government is not to allow self-government. If people were self-governing, there would be no role for government. You or I might decide to govern ourselves — levy our own taxes, figure out our own foreign policy, provide our own health insurance.
Self-determination means you get to decide what government is to boss you around. Voting is the means by which you are supposed to decide — in the ideal world as imagined by the New York Times — who runs the government. Both are frauds.
People are not better off when select their own tyrants. They’re better off under a benign, neglectful empire. That was true of the Serbians before Princip wasted an archduke. It was still true 70 years later for the people who lived in Hong Kong, so long and fruitfully ignored by the British.
Princip blew a hole in the Imperial dike… and politics flooded the century. It crested in the early 60s… when half the world was under the thumb of communism and the other half under the thumb of liberal democracy. John Kennedy told listeners at his inauguration that they should ask what they could do for the government, not what it could do for them. The government was not a provider of services — but a master to be served.
Thankfully, the crest of politics has passed. The Soviet Empire — which replaced, but did not improve, the Romanov one — has gone. People are more cynical about government and what it can do. But discrediting the falsehoods and lies of liberal democracy is still in the future. My guess is that it will be one of the major projects of the 21st century.
December 29, 1999
In Today’s Daily Reckoning:
*** Rocket Chips stalled… Nasdaq off… internets down
*** Is time running out…?
*** Vladimir the Terrible — on the internet!
*** Eventually it will be over. I’m referring to the Great Bubble in the Nasdaq. Just look at a chart of the Nasdaq this decade. The line rises steadily, until late fall of ’98 — then it goes vertical.
*** It will almost certainly go back the way it came —vertically. In the mean time, we watch and wait… Like a worried father who sits up waiting for his overdue teenage daughter (I have experience at this)… every little sound in the hallway is mistaken for her return.
*** And so, I note that the Nasdaq once-again tested the 4,000 barrier yesterday… but ended the day down.
*** The internets, too… primo inter pares among the Rocket Chips… were down a little too. AOL is now 18% below its high. Yahoo fell $24 yesterday.
*** If you like a little excitement in your life, you should consider shorting the Nasdaaq 100 — QQQ. Sooner or later, you will make a lot of money — if you haven’t lost all of your money first.
*** While the Rocket Chips stalled yesterday, the Dow was up 85 — and that’s what made the news. "US Consumers Spirits Soar" said the headline in the Herald Tribune.
*** If their spirits are soaring, it’s because they’re not paying attention. The latest news is that house prices are rising… which caused bonds to fall. And oil is at $26.82.
*** Gold was up too — $1.70.
*** Bill King cites a report saying that the number of billionaires in America has grown from 66 in ’89 to 268 now. But with paycheck increases averaging 4%… most people are not getting rich. This, too, is part of the illusion that drives the Nasdaq bubble. The premise is that "Everyone is Getting Rich." But it just ain’t so. "Identify the trend whose premise is false," said Soros, and you can make a lot of money.
*** Of course, he said to ride the trend until it is discredited. I never even bought a ticket. But those who are aboard now should be collecting their luggage and putting on their coats.
*** Because time must be running out. "If Mr. Greenspan does not take action," warns British economist Tim Congdon, "soon international investors will do it for him." He refers to the way in which America’s huge trade deficit is financed by foreign investors — to the tune of almost $1 billion a day.
*** China opened its own high tech stock market.
*** And Vladimir the Terrible has gone on the internet to tell the world about his vision for Russia. He seeks "the restoration of a guiding and regulatory role for the state."
*** While Vladimir chats with the world on the ‘net, his troops are facing tough resistance in Grozny. They’re fighting just the kind of war they tried to avoid… house to house, against a very tough opponent.
*** For a risk-free world, the death toll in Venezuela has mounted beyond belief. The Financial Times reports that it may reach 50,000 — the worst natural disaster in Latin America this century.
*** Against the backdrop of so many deaths, the minor hardships we suffered in France recently barely deserve mention. The Figaro headlined the hurricane-force storm as an "Ecological and Cultural Disaster." Trees are down everywhere. 68 people died in France.
*** Our power was restored by evening. But it will take 100 years to replace the Atlas cedar in the yard.
*** By the way, it was on this date that Germany began dropping incendiary bombs on London in 1940.