Nick’s Note: Today we’re handing the reins to longtime PBRG friend and Bonner & Partners founder Bill Bonner.
Earlier this week, Bill penned a special entry to his daily Diary… a rare, definitive solution for how to solve income inequality.
We think it’s one of his best pieces so far this year. And we hope you enjoy it as much as we did…
By Bill Bonner, chairman, Bonner & Partners
The ides of March are come.
Ay, Caesar, but not gone.
—Shakespeare’s The Tragedy of Julius Caesar
Readers frequently accuse us of being idol wreckers; tearing down without building up, criticizing wantonly while offering no constructive advice. They say we are unpatriotic, un-civic-minded, unhelpful, and un-American.
They allege that we must be part of some cynical order: The Brotherhood of Let-it-Be… or worse, some dark, satanic cult whose aim is to destroy all that is great and good in our Republic… by pointing out its idiocies, contradictions, and swinish behavior.
Often in the middle of the night, disturbed by allegations… deprived of oxygen, and slightly giddy from having had too many glasses of Malbec with dinner, we reconsider.
We imagine that maybe we should forsake our sniping brethren, cross over to the sunny side of the street, and begin making positive suggestions.
Then, in the light of day, we come to our senses and return to undermining the administration.
But today, we would like to introduce a few stray nuances… illustrate our position with some new information… and solve, once and for all, the problem of inequality in America.
First, trying to understand what is going on is hard enough. But expecting us to come up with solutions in addition is asking too much.
Connecting the dots requires you to stand back… away from your own self-interests, prejudices, and groupthink support network.
It is lonely, unrewarding, and unrelenting work—sniping at foolishness and conceit. Every day brings dozens of new targets. Pick up a paper and peruse the headlines; there’s hardly a single one that doesn’t deserve ridicule.
But the last thing people want to hear is negativity—or worse, criticism.
Not of their government, their country, their party, their church, or anything else to which they maintain any remote allegiance or for which they retain any sentimental affection.
Instead, they want warm, flattering lies. Which is why the glib, superficial con man will always draw a bigger audience, earn more money, and get elected to the highest public office.
Second, just because you identify something that others take for a “problem,” does not mean there is either a genuine problem or a practical solution.
Often, if you take the time to study the dot pattern carefully, it is obvious that no conscious improvement can be made. And if one were attempted, the result would be an even bigger mess.
Mountebanks and Quacks
That, of course, is what we make of the U.S. economy and its markets today.
After more than three decades of the feds’ meddling, improving, and perfecting our financial system, it is now so thoroughly out-of-whack that the only sensible response is simply to back off and let it get back into whack on its own.
Of course, that is exactly what will NOT happen… for all the many reasons we have explored nearly every day for the last 20 years.
Too many people have too much riding on this nag to leave the track now. Their houses, their incomes, their investments, their jobs, and their reputations all depend on it. They’ll stick with it to the inglorious end.
Third, all the real progress in human affairs has been made in spite of the improvers.
This is not true for the real improvers, who have solved practical problems such as river blindness or perma-press fabrics. But it is true for all the people who offer grand “solutions” to political, social, and economic “problems.”
They are almost universally mountebanks and quacks who have never solved a single real problem in their lives… and never will.
The proof of this assertion is easy enough. On one hand, there is not one example of it in history.
Pulitzer Prize-winning journalist Jimmy Breslin used to say that the “last successful government program was WWII.” But then, the U.S. was not trying to improve the world… but protect it from the world improvers!
On the other hand, there is a simple theoretical reason why the meddlers can never either identify or solve a public policy problem.
To wit, all that is genuinely good, decent, or useful in life comes about through win-win deals, made by people with no gun to their heads.
But the reformers and improvers always have a pistol on their belts, and don’t hesitate to use it. They don’t suggest, they insist—with laws, arbitrary rules, programs, policy, and extravagant schemes paid for in blood, treasure, and aggravation exacted from common folk.
One proposes to build a canal, by hand, in the winter time with slave labor. Another proposes a new farming system; 30 million people starve. Another wishes to make the world safe for democracy; millions die in the trenches.
No “please.” No “thank you.” And the only “sorry” we ever heard came from former Secretary of Defense Robert McNamara who, late in life, wept as he regretted his part in the senseless killings in the Vietnam War.
Relationships—between employer and employee, buyer and seller, men and women—have evolved over thousands of years. But the 25-year-old reformer is convinced he can make them better.
He sees the future coming, surely… and is determined to make it come faster—by forcing people to do as he says. If he had his way, he’d have the angels shoveling snow and midgets playing professional basketball.
In short, the interveners only have win-lose deals. And they are the only winners of them. Everyone else… whose plans are disrupted, whose lives are cut short, whose money is stolen, and whose dignity is compromised… loses.
Money and Caffè Lattes
But let us move along to our example. Onto the scatter cloud of dots came this addition on Tuesday, from The Wall Street Journal:
From 2010 to 2016, large cities generated 73% of the nation’s employment gains and two-thirds of its output growth. A study by the Economic Innovation Group found that from 2010 to 2014, just 20 counties accounted for half the new business formation in the entire U.S.
These developments have reverberated through our politics. In the 2000 election, Al Gore won 659 counties, representing 54% of U.S. gross domestic product, while George W. Bush carried 2,397 counties with 46% of our GDP. In 2016, Hillary Clinton won only 472 counties, but they represented fully 64% of GDP. Donald Trump’s 2,584 counties accounted for only 36%.
Hmmm. What to make of it? Politically, it looks bad for Donald Trump. Trumpismo appears to be a socioeconomic dead end. People in the dull, backward precincts hoped their man could turn things around.
Our best guess, from the get-go, was that it couldn’t be done. You can’t back up and Make America What It Used to Be. Water passes under the bridge only once.
On the other hand, there’s no reason that America can’t be great again. But that means going forward, not backward. That means, simply, more win-win deals wherever people want to do them. But that is not what the meddlers are proposing, neither those on the Trump Team nor those on the opposing team.
Predictably, Mr. Galston of The WSJ believes the gap between slow-moving small towns and fast-paced city life needs to be narrowed:
President Trump, meanwhile, believes that trade restrictions will benefit the parts of America that have been left behind. The evidence suggests the opposite. We have a big problem with no obvious solution, but neglecting it is not an option.
Why not? Neglecting it is the best option.
Why does all the country have to be the same? What’s wrong with some areas where you can ease into the future at a slower pace? What’s wrong with letting people decide for themselves what kind of place they want to live in?
Simply, if you live in a Trump-supporting ZIP code, you are likely to earn less money. And live less well… at least by some measures.
You will have fewer restaurant choices. You may find it difficult to locate a good caffè latte. And as for employment, you’ll have to take what you can find.
If you live in one of the “dynamic” urban areas, on the other hand, your economic prospects improve.
But money and caffè lattes are not everything. In the bummed-out heartland, you rarely have trouble finding a place to park.
Nor do you have to attend a lecture on “intersectional feminism” just to keep up with the trends. The cost of living, too, should be vastly lower.
Innovations—in art, science, and industry—have always been spawned in urban areas. Random intersectional contacts—especially when there are a lot of immigrants involved—breed mutants, curiosities, and progress.
So if you want to earn more money, be more hip, and live in a more lively, dynamic area, move to a place that offers those things.
If, on the other hand, you want a quiet, inexpensive life in familiar places with familiar people… you can go to a small town or rural area.
Grandest Leveling Program
But this live-and-let-live attitude of ours is sure to draw fire. “Negative.” “Defeatist.” “Where’s the solution?” they will ask.
It’s easy to give a crackpot solution. So, to avoid further criticism, we will join the quacks and mountebanks, with a program that is sure to work.
You saw the movie, Trading Places?
We will simply swap people around. Yes, using the Big Data of Amazon and the NSA, we will solve all the problems of inequality with the grandest leveling program ever devised.
If you live in a Kentucky hollow, you will be required to live half the year in the canyons of Manhattan. If your house is on the Malibu coast, you will be forcibly moved to a Chicago slum. If your wife is fat, you will be assigned a skinny one.
Now we’re getting somewhere, aren’t we?
If you are a normal, red-blooded American male, a member of the NRA with a MAGA cap, you will be sent to live with a black, cross-dressing lesbian couple in Baltimore.
If you are a farmer from the Dakotas, you will become a fisherman.
If you are a senior living in a veterans’ home, you will be reassigned to a college sorority.
If you are rich, you will spend six months of the year picking through trash bins in the inner city.
If you are a Mormon or Seventh-Day Adventist, you will be given heroin and meth injections.
If you are smart, you will be obliged to watch TV to dumb you down.
If you are dumb, you will work for the government.
If you voted for Hillary, you will be given psychological care.
And if you live in one of Washington D.C.’s crony ZIP codes, you will be sent to jail, where you probably belong.
Chairman, Bonner & Partners
Nick’s Note: As Bill mentioned, the highest quality of life can be found not in the bustling coastal cities, but in America’s forgotten heartland.
For nearly a year, Bill Bonner Letter coauthor Dan Denning has been crisscrossing the American West. His mission was to find overlooked and undervalued towns that could serve as affordable “boltholes.” Subscribers of The Bill Bonner Letter can read about Dan’s six overlooked “bolthole towns” here.
And if you’re not a Bill Bonner Letter subscriber, consider joining Bill and Dan by going right here.
We’re looking for someone who eats, sleeps, and breathes micro-cap stocks…
…someone who combs the market for little-known companies with explosive potential…
…someone with a deep network of contacts in a variety of industries…
…someone with great investment ideas we’ll never see on Bloomberg or in The Wall Street Journal…
If that sounds like you, read on here… you may have what it takes to join our team as a high-profile investment expert.
BRAND-NEW BOOK RELEASE
Bill’s coauthor on The Bill Bonner Letter, Dan Denning, just published his new book The Oath to Save America. And what it reveals is startling.
Dan writes that the next market crash is looming. But this one won’t be an accident. Dan believes the next crisis could be orchestrated by a shadowy group right here in America. Dan calls them “The Oathkeepers.” Get your very own copy right here.