The American Brain
The "willing suspension of disbelief"…helpful in convincing oneself that Will Smith could save the world from aliens…but why are Americans using this technique to look at their government and leader?
"There is no point in asking why Americans get caught up in the presidential election ritual, even when the campaigns are obviously manipulative and the candidates are far from the best the country has to offer…All rituals rest upon faith, not logic; all involve suspension of disbelief; and all seem as reasonable to the faithful as they seem absurd to unbelievers."
-Forrest McDonald, The American Presidency
"I guess you found me out," said a companion at lunch yesterday. "Yes, I am a monarchist. I don’t really believe in all these elections."
The man speaking was tall, fine-featured, very British, with the sort of hair your editor envies. But then, he envies almost all hair.
"Look, it all boils down to what the people will accept. They went along with monarchies for hundreds of years and were perfectly happy with them. When they didn’t like their king, they chopped off his head. That’s the way it ought to work."
And that is the way is does work. People go along with whatever hooey is popular. Not only do they go along with it – they go out of their way to take part in it. The front page of almost all the newspapers in Europe this week carried photos of long lines of Americans – eager to stand in solemn fraud, in order to keep it going.
Would it make any difference if Bush and Kerry had just flipped a coin or fought it out with broken-off bottles in their hands? We don’t know.
Categorical Imperative: Democracy No Improvement
As near as we can tell, democracy offers no particular improvement over monarchy or theocracy, or even dictatorship. Every system separates citizens from their money, bosses them around to some degree, keeps delinquents in line and generates its own statues, myths, and holidays.
But democracy is the thing now. Our crusaders in the East do not risk their lives to force others to kneel down before the true cross; we judge our success, not on how many people convert to Christianity, but on how many turn into Democrats! Not for the first time, we have reached what Francis Fukayama calls "the end of history." We can imagine no better system, no finer people, no higher authority, than the wisdom of the muddled masses…and no more glorious end than that which our fat plumbers, skinny scholars, and sly insurance salesmen have led us to in the last election.
And so, the public spectacle of 2004: More people than ever before cast their ballots in the U.S. presidential election. Americans have never been less free – there is a snoop behind nearly every door, a permission form to be filled out in nearly every day’s mail, a government regulator for practically every known activity, and a large mortgage attached to almost every house. Nor have they ever been more timorous: A few fanatics with towels on their heads and murder on their minds have thrown the entire nation into hysterics. Nor have they ever been more in debt and more beholden to foreign creditors. Nonetheless, never before have they gurgled so triumphantly about America’s freedom, courage and democracy.
What follows is a rambling discussion about why this is so. Our beat is markets. But markets are moved by people and people are moved by their own beating hearts…and the curious programming of their own brains. We take a look at them:
Before mankind even existed, the pre-man primate lived on his instincts, like the rest of the animals. He had no language – no words.
Categorical Imperative: Fight or Flight
Which was probably a good thing. Often, he had no time for conversation. He had to react quickly. Whether he was hunting or being hunted, an animal responds according to a very sophisticated, but completely unspoken and un-thought, logic. In nano seconds he makes life or death decisions, without reference to any formal reason, elections or newspaper headlines.
Still, he relied on what Kant called the "categorical imperative." The approach of a lion, for example, must have given rise to the same emotions as a registered letter from the IRS today. It also triggered another immediate categorical response: flight. Our monkey ancestor might never have seen the lion before. For all he knew the big cat was a vegetarian. Or it was merely another monkey dressed in a cat suit. He could not know everything. So, he acted as modern humans do – on basic instinct, intuition and the categorical imperative. He evolved categorical rules…or it is probably more correct to say they evolved him. See a big cat-looking animal approaching? Get the heck out of there as soon as possible! Those without the quick categorical response became lunch, not parents.
The development of words and language made a big difference, because it introduced a new kind of thinking. Words had meaning. Words became categories – awkward, not nearly as subtle and fluid as intuitive categories…but versatile in their own way, because they allowed humans to pass along more complex thoughts and sentiments.
"Cat! Big cat! Hungry cat!"
Unlike sounds that conveyed only emotions – fear, opportunity, danger, sorrow, and the like – words contained ideas…and large, super-charged metaphorical categories.
"Home," for example. The single syllable is rarely emitted without a charge of emotion. In some circumstances, it brings tears to ones eyes. It has a specific meaning – one may imagine his own ivy-covered cottage in the foothills of the Cottswolds. It has a general, categorical meaning too. "Home" is where people live. It is also a financial asset for millions of people. A cost center for millions too. It is even a political term. Leftists, reformers, Bolsheviks, Nationalists, Communists, and progressives of various social and political bents generally hate the word. It represents a traditional, bourgeois civilization – with its emphasis on private family life. Given the opportunity, the reformers abolish the home and replace it with state nurseries and boarding schools for the children, along with drab, worker-housing for the adults – often sharing small apartments with other households.
Categorical Imperative: A Good Cause
People will put up with almost anything, no matter how absurd, if it is for a "good cause." That is the disadvantage of man over animal. The animal will follow his instincts. Man will convince himself that his instincts are wrong…outmoded…retrograde. Then, he will do the most remarkably asinine things, such as substituting state-run reformatories for family-run homes.
Often, the "smarter" the man, the more absurd and idiotic he can be, for his "intelligence" helps him use words to persuade himself and others to do the most preposterous things! That is also George W. Bush’s great advantage; he does not appear smart enough to be an idiot. The words didn’t make much sense, but voters sensed that he had an intuitive understanding of the world similar to their own. Bush may be a fool, they reasoned, but when they looked at him, they saw their own honnete face…and they liked it.
Today, we humans are smothered with words. Words tumble out of newspapers, books, reports, TV, radio, Internet. Some of the words are precise and useful: The formula for making bombs…a recipe for sponge cake…the instruction manual for a new computer. But many words are nothing more than invitation to rumble.
For example, when President Bush learned that sovereignty had been passed back to the Iraqis, the commander in chief sent a little note to Candoleeza Rice. With no speech writers or spinmeisters present to help, "Let freedom reign," wrote the president.
We have no idea what Bush meant to say – if anything. If he meant that now we should back off and "let freedom reign," it is a strange thought for a president who sent 150,000 troops…killed 10,000 to 20,000 foreigners (whom, as far as we know, never did anything to us)…and destroyed the Iraqi’s government.
Maybe he meant that the Iraqis were now free…a situation he is merely applauding. But was it true? In what sense? Left to their own devices – that is to say, free of foreign meddlers – Iraqis seemed quite content with a dictatorship. If getting rid of Saddam were so important to them, why would they not have done so themselves? The English cut off Charles I’s head in 1649. Surely, the Iraqis had their own Cromwell somewhere…ready to do the "cruel necessity."
Bill Bonner discusses word meanings, the American brain, and the Categorical Imperative.
Categorical Imperative: Remarkably Malleable
Of course, the president’s apologists will have dozens of good reasons why the Iraqis needed us to intervene. We do not argue with them. We only bring it up to show how remarkably malleable and convenient words can be; it is a strange "freedom" that is available at the whim of foreign invaders.
Is a democracy – or whatever it is that America has set up in Iraq – freer than a dictatorship? We don’t know. It depends. Citizens may not be free to vote in a dictatorship, but they could be much freer in other ways. Given the choice between a dictator who left us alone…and a democracy where everything we did required state approval – we would choose the dictator!
One could ask a million questions about "freedom" or "democracy" and still know nothing. It is like an argument between a madman and a U.S. Senator: Half incomprehensible, and the other half, soothing lies. "A tale, told by an idiot, full of sound and fury," as Shakespeare put it, "signifying nothing." The words do not confront each other; instead, they pass like busloads of tourists in front of a philosopher’s grave. Who was he? What did he say? What does it mean? No one knows or cares.
You can deconstruct the word "freedom" into a thousand different syllables. Mohatma Gandhi once remarked that he was freer in his prison cell in New Dehi, than most people walking around outside. He meant that he was a free thinker, while others were imprisoned by their own traditions, instincts and intuitions. He was right…but doubly wrong at the same time. He was free of the traditional thinking of the average Indian; he had merely become a prisoner of different thoughts – his own – and was now trapped in two cells at once.
But now in the name of "freedom" and "democracy," Americans leap to their own suicide. They are so sure that their system is foolproof that that rush to test it, counting on safety nets that hardly exist. The world has never seen greater recklessness. Who would have thought you could get away with a 6% current account deficit? Five trillion dollars worth of deficits – what Evil Knievel of state finance would attempt to jump over it?
Even Wilson would have been shocked by the idea; Eisenhower would have been appalled.
But that is the charm of the American frontal lobe; it sets up thoughts like drinks at an Irish wedding. Before long, the guests can barely find their car keys, let alone their way home.
The Daily Reckoning
November 5, 2004
The voters have had their say. Now, the markets will have theirs.
Yesterday, the Dow rose – celebrating the Bush victory.
But what’s this? The dollar fell to its lowest level in nine years…and gold, the dollar’s natural rival, rose to its highest price in 16 years.
The votes that really count are those of the foreign central banks – the strangers upon whose kindness that the United States so desperately relies. Sooner or later, they’re bound to turn their back on all of the United States: The dollar, the consumers, and the debt. That trend already seems to have begun.
Even the New York Times has noticed. "The dollar’s long-term path is downward," says the august journal.
Meanwhile, the Bush administration is planning to borrow the most it has ever borrowed in the next quarter – $147 billion.
Since George W. Bush came to the White House, the dollar has lost more than 20% of its value. It is widely expected to lose even more in Bush’s next four years. Also, since Bush was elected the first time, tax revenues have fallen $100 billion, while federal spending has gone up $400 billion. Over the next 10 years, deficits are expected to rise to nearly $5 trillion.
This governmental recklessness, on the top of a private recklessness (as reported yesterday, Americans spend $1.04 for every $1.00 they earn) must bring the dollar down. Practically every economist says so.
No currency, economy,or people have ever survived this kind of recklessness without some kind of crack-up. The currency markets think they can hear the crash even before it happens. Foreign central bankers must have their hands cupped to their ears too – straining for a hint of what is coming.
We don’t know what will happen. If even the New York Times thinks the dollar must fall, we wonder why such widespread expectations are not already in the dollar’s price. We remember earlier this year when almost everyone expected the dollar to fall – it did not.
Could the dollar turn out to be like George W. Bush? All the intelligentsia are opposed to him, but the man is popular with the masses. Like Bush, the longer the dollar stays in such an exalted position, the more harm it does. But that doesn’t mean both won’t be there for a long time.
And now, more news, from our friends at The Rude Awakening:
Dan Denning, reporting from downtown Baltimore…
"But amidst the uncertain conditions of our changing petro-political world, liquid natural gas (LNG) will certainly assume a prominent role. As I see it, there are two major opportunities in LNG: terminal construction and tanker construction."
Bill Bonner, back in Paris
*** "I’m enjoying the spectacle immensely," said our friend Michel yesterday. "Le Monde and all the liberal press in America and Europe had all said Kerry was going to win. Now they look like the fools they really are.
"I didn’t like Bush either. But I despise the people who despise him."
*** A note from the Far East…
"I’m looking out over a totally black city of 16 million people," reports Addison Wiggin from a hotel room 54 stories above Shanghai.
Here at the Daily Reckoning we believe in knowledge gained by experience. Forthwith, Addison is on tour in China, where he’ll be meeting several prominent figures from the business world, making a few investigations of his own, and testing the veracity of the great Pao Mo of the 21st century. (pao mo = chinese for ‘bubble’)
His first impression? "When we first drove into the centre of town, it was lit up like Times Square. Now… it’s 10.30pm… and they’ve blacked out the entire city – except for hotels where Westerners are staying.
"I can smell the soot and smog in the air. Of course, it’s too early to draw any conclusions, but the guy on our bus – a guide who had just hosted the NBA on a tour of China – was quite vocal about the fact that Shanghai is the most Western and modern of Chinese cities…"
Could it be window dressing? We will see…
*** How much oil is there? I.H.S Energy, a Denver oil and gas company, tells us that in all its billions of years, the best the planet Earth could do was produce 2,285 billion barrels of the stuff. So far, says the report, we have pumped out 1,020 billion barrels, leaving 1,265 billion left to use.
In other words, in the space of less than a hundred years, the world has used nearly half all the oil the world ever made. Trouble is, the other half could go a lot faster. Because most of the world’s people live in Asia, and for most of the last 100 years most of the people in Asia didn’t use any oil at all. That is changing. As recently as 1990, the Asian giants consumed only 3.5 billion barrels of oil per day. In 2003, they burned 8.7 billion barrels every day. Oil demand in India and China is rising five times as fast as demand from the rest of the world.
Does this mean we will soon run out of oil? Not as long as market forces are allowed to operate, say economists. But if market forces are allowed to operate they are likely to boost the price of oil in dollar terms. The difference between 50 dollars and a barrel of oil is simply a matter of supply and demand. The supply of oil is falling, and falling faster each day. The supply of dollars, on the other hand, is rising. Any given day or month or year, the number of dollars may rise or fall, fast or slow. But any given day could have more dollars than the day before; like prostitutes on the rue St. Denis, there are as many as you could want…just waiting for when you need them.
Before the last drop of oil is pumped and Hell freezes over, the ratio of dollars to oil is sure to change – toward more of the former and fewer of the latter.