Tuesday, February 26, 2008

Mobs, Messiahs, and Markets

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Bill Bonner has a new book out (see my posting about his previous one), this time with a new co-author, Lila Rajiva. Without intending to diminish the contribution of Ms. Rajiva, I'll refer to him as the author, and it does appear that the book takes its tone from him.

As in his earlier Empire of Debt, he again thrashes what he sees as the United States's financial and imperial follies, but the frame is wider this time, stretching far back into world history. Although he repeatedly uses the expression "public spectacle," it's a somewhat fuzzy metaphor; he seems to mean by it every delusion that has ever suckered large numbers of people. Needless to say, he has plenty of examples to draw on. We get his take on wars, crusades, witch hunts, modern art mania, CEO pay, and other examples of people, often very smart people, being led on a leash by the primitive part of their brain.

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This part of Mobs strikes me as largely padding to make a full-length book out of the payload delivered in the final chapters. Most readers, other than perhaps the very young, will have learned elsewhere about "extraordinary popular delusions and the madness of crowds." Bonner does spin it out entertainingly, though.

We can thank him for recounting the only funny quip I have ever seen attributed to Stalin, not a man noted for his sense of humor. In the unbelievably grim conditions of the Soviet fight against the German invasion of 1941, the Soviet soldier who wasn't killed by the Wehrmacht or taken prisoner (as good as a death sentence) also had, behind him, Stalin's "blocking battalions" with orders to shoot him if he took a step back. Comrade Stalin remarked that in his army it took more courage to retreat than to advance.

Probably no book of Bill Bonner's would be complete without a few barbs at New York Times columnist Thomas Friedman.
Thomas Friedman's opus [The World Is Flat] claims that information technology and American-style capitalism (to say nothing of the protection racket run by the empire's military forces) have connected the world so much that the Renaissance discovery by Columbus that the world is round has given way to the postmodern discovery by Friedman that it is really flat. Now we all play on the same level field of global commerce. We all wear the same clothes (business suits for adults, Che T-shirts for the young); talk the same language (English); share the same political ideology (humbug democracy); and worship the same God (mammon). …

Friedman is like a geologist who has just noticed the weather: Rain, wind, sun, storm — all of it seems to wash down and wear down the surface of the earth, he notices astutely. Aha, he concludes, the mountains will keep on eroding. Pretty soon, the whole world will be as flat as Kansas.

If he had any imagination or curiosity or even had remembered to look down at the ground under his feet, he would have wondered how it was possible that after so many millions of years of leveling, the earth was not flat already. And if he had bothered to look beneath the surface, he would have seen why: There are new volcanoes bubbling up all the time, new mountain ranges welling up, and eruptions waiting to explode.
For all the breezy high spirits of its earlier chapters, Mobs (like Empire of Debt) sometimes sinks from libertarianism to irresponsibility. Bonner can seem totally cynical, unable to comprehend that causes are not invariably attributable to groupthink and fanaticism, or that threats can be real. There is plenty to criticize in our so-called "war on terror," including the principle that we must pretend that terrorism is random and evenly distributed among all groups, or that it's limited to a few "extremists" who've hijacked a benign religion. But that's not Bonner's complaint. He says the whole thing is a storm in a teacup:
The actual risk of being a victim of terrorism is as remote as, say, the risk of being drowned in your bathtub. Even in Israel, a person is four times as likely to die in a traffic accident as in a terrorist attack. Indeed, since the State Department began counting terrorist deaths in the late 1960s, even including the deaths from the attack on the World Trade Center towers on September 11, 2001, the number of deaths from terrorism has been about the same as the number of people who have died from severe allergic reaction to peanut butter. Yet, since 2001, the U.S. government has spent billions in their effort to protect Americans from terrorism. As far as we know, it has spent none at all to protect us from peanut butter.
Bonner does not strike me as a stupid man, but he can say
things that are dead stupid. Surely he realizes that an enemy that is deliberately trying to cause the deaths of many Americans is a very different kind of problem than accidents. And as usual with complaints about the money spent on national security, he ignores the likelihood that, for all its absurdities, that security effort has helped keep the number of casualties from significantly rising (in the United States). I think our author is happy to forgo critical thought for the sake of a wisecrack. And given the ever-growing nanny state, I wouldn't be surprised if there isn't a federal task force or study funded by a grant devoted to finding a rationale for restricting peanut butter.

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Still, despite the fluff and the occasional moral vacuity, Mobs gathers its strength toward the end for one of the best summations I have read of the artificial life support that Greenspan and Bernanke have undertaken to keep the normal business cycle at bay while permitting fantastic bubbles in technology stocks and housing to carry on — until, as we have seen, they become unsustainable.

Bonner's argument isn't, fundamentally, just about economics. He believes that no planners or bureaucrats can possibly adjust public policy to the almost infinite variables that affect our lives. He's a welcome member of the resistance to centralized states that increasingly dominate aspects of personal lives that individuals are best qualified to determine for themselves, whether those states are called Communism, Fascism, or the European Union.
Customs, conventions, and traditions resemble gold, rather than paper — because they can't be manufactured out of nothing. They can only be found in the soil in which they live. They reflect the way people really think and act at any given time, unlike policies and laws so far ahead of — or behind — the times that people resist them or are indifferent to them.

Like gold, traditions reflect real value. They contain more information from the past — from the history of the people among whom they are practiced. And, like the pricing mechanism, traditions are a communication system that lets people signal their desires and expectations faster and better to each other. Government policies reflect only the demands and desires of one generation — the living. Even if they are passed by a democracy, they are not fully democratic at all, or at least, not democratic enough. They consult only living citizens. They forget the dead.
It would be hard to better this as a pithy criticism of our present pseudo-republic, which not only has abandoned but seems no longer even to comprehend the insights of the country's founders, who themselves consulted thinkers going all the way back to antiquity. The very concept of a national government limited to things more local government can't do, like defense (not militarized international social work) and maintenance of a sound currency (the opposite of what our federal government does today) is quickly becoming the language of the dead, not the living. And, as Bonner says, we no longer consult them.

Nevertheless, they are still trying to get our attention. If only they could make themselves heard through the noise of a few hundred million TV sets.

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5 comments:

David said...

One often sees forms of his assertion that the probability of being harmed by a terrorist is very low, therefore we shouldn't worry aout it so much. In this post, I respond to a similar argument, made by someone who definitely should know better.

Rick Darby said...

David,

Like the Professor Minsky you quote, it's hard to say whether Bonner is serious. Either he is really logic-challenged or he will say anything he believes is a good "one-liner." A problem with his entertaining book, which I might have made more of in my posting about it, is that for all of Bonner's sensible criticism of big ideas that can only be justified in the realm of thought, he has at least one of his own: that nothing lots of people believe can be true. Since lots of people think terrorism is a real danger, it must be just another "public spectacle" created by and for an ignorant mob.

Lila Rajiva said...

Hi Rick Darby -

Thanks for reviewing my book with Bill Bonner.

You might be interested that the passage you quoted at the end is actually mine and is included in a web piece I wrote.

Since your post sounds just like a conversation I had with Mr. Bonner about my contribution to the book and also is paralleled by a similar post on Seeking Alpha, also almost exactly referencing that private conversation, only a few days prior to yours and the Seeking Alpha reviews, I find it very interesting.

I trust you will see that the book is held under copyright by both of us. I can supply further details if you wish.

You should know that Chapters 4,5,10,11, half of 3,9,and 17 (including the above passage) and contributions to 8,12, and 15
as well as considerable rewriting of the whole book, epigraphs, half the structure and titling, are all my sole work.

This is attested to by Mr. Bonner himself.

With no respect intended to Mr. Bonner or you.

Lila Rajiva

Rick Darby said...

Lila,

If you are complaining that I slighted you as co-author, then I apologize if I gave anyone the impression that your part in the writing was negligible.

I wrote, "Without intending to diminish the contribution of Ms. Rajiva, I'll refer to him as the author, and it does appear that the book takes its tone from him." I thought it would be awkward to keep saying, "Bonner and Rajiva" this and that, and tedious for my readers (which I am glad includes you on this occasion). The style does seem very much in keeping with Bill Bonner's in The Daily Reckoning, which I receive via e-mail and enjoy. Perhaps the two of you are simpatico enough that your words blend seamlessly.

I do not understand the implication of your statement, "Since your post sounds just like a conversation I had with Mr. Bonner about my contribution to the book and also is paralleled by a similar post on Seeking Alpha, also almost exactly referencing that private conversation, only a few days prior to yours and the Seeking Alpha reviews, I find it very interesting." If you will explain this to me we can continue the conversation if you like.

Lila Rajiva said...

No offense intended or taken to you, Mr. Bonner or anyone else. The internet gives rise to attribution problems, no doubt.
Here's my email:
lrajiva@hotmail.com