When it comes to the topics of economics and finance, Bill Bonner is one of my favourite authors. He has a knack for taking apart seemingly complex topics and showing how they reduce to one or more much simpler concepts. He draws historical parallels where relevant. And he does so with ruthlessly applied sardonic wit. Indeed, I rarely get through a chapter of anything he’s written without at least a giggle or two.
Hence I was pleased last week to receive a review copy of his most recent book, Un-Civilising America: How Win-Win Deals Make Us Better.
The book begins where it should: at the beginning. Bill takes us all the way back to ancient Babylon, Egypt and other early civilisations, showing us how, in key respects, they were built on a foundation of restraint, communication and cooperation. While violence remained an unfortunate aspect of life, its role in day-to-day affairs gradually declined. Why? Because cooperation began to pay better returns.
As Bill explains:
The central idea of this book, in its crudest and simplest form, is that economics leads morality, and that the transition to a win-win world beginning about 4,000 years ago brought modern morality with it. (p.39)
That said, with the arrival of civilisation, coercion didn’t disappear. Rather, it changed form. We might be impressed by the pyramids at Giza, but Bill asks the important question of how the labourers felt, toiling away dragging stones up ramps, when they could have been tending crops and milling grain. Or baking bread. Or spinning cloth. Or making bricks. Or building barges to transport all of the above.
Those latter activities would have had an enormous positive impact on the average Egyptian’s ability to feed, clothe and shelter their family. But the vanity of the pharaohs knew no bounds, it seems, and so, through various forms of coercion, the labourers were required to toil to other ends.
Rome wasn’t built in a day, and much of it was built by slaves. Slavery remained common throughout the vast bulk of recorded history, and across all continents and cultures. But the balance gradually shifted and, during the Industrial Revolution, swung decisively in the direction of win-win.
Indeed, the Industrial Revolution is perhaps the best historical example of economics leading morality. It led, in various ways, to the rise of the middle-class; the end of slavery; universal suffrage; and an explosion of individual liberty.
The freedom to choose one’s relationships, one’s profession, what one purchases, where one lives, our lifestyles… We take all of the above largely for granted, yet the tremendous, win-win freedom so many of us enjoy is still relatively new in mankind’s historical and cultural experience.
As Bill explains, it is also all at risk.
The twentieth century was one of net progress, yet with huge setbacks. The first was World War I, a war fought for dubious, arguably avoidable reasons, and which achieved… nothing. Well, that’s not entirely true. It set the stage for an even grimmer conflict in global size and scope: World War II.
The second setback was, as Bill terms it, the rise of the “isms”: Bolshevism in Russia and Fascism in Italy, Spain and, most notoriously of all, Japan and Germany.
Civilisation, it would seem, doesn’t move in a straight line. Far from it.
In Bill’s view, this is because there is a constant tug of war between two ways of getting what we want: violence and persuasion. The former is a win-lose proposition. The latter, win-win. We may be civilised, but we remain human, and while we can’t always get what we want, some of us will occasionally resort to violence in trying, and at scale.
Technological and social innovations, over time, become embedded in the culture. Yes, there are setbacks, sometimes large and unpleasant, as described above. In Bill’s view, these tend to come about when what he calls “fake myths” temporarily displace “real myths”.
As he explains it:
Real myths are those social innovations that rest on generations of experience, contribute to the survival of the species, and are compatible with modern civilisation. Fake myths are those that spring from conscious or semi-conscious reasoning, often driven by self-interest. (p.207)
How to tell them apart? Bill gives us four “tests”:
- Time – real myths survive when they tell us something useful… often some enduring truth that would be painful or impossible to learn on our own.
- Simplicity – real myths are easy to understand and require no complex assumptions to make sense of them. Compare “Thou Shalt Not Kill” and “Reduce, Reuse, Recycle” to “Killing is OK if the state condones it” or “Carbon is killing the planet; the science is settled”. (By definition, science is never settled.)
- Universality – what is common sense on a small scale should also apply to large-scale social phenomena. Think deficits and money printing. Now imagine each household trying to spend and print its way to prosperity. Peter outspends Paul; Paul outprints Peter… If it’s nonsense at small scale, it’s nonsense at large scale too. (FYI this is the sophistic logical trick that JM Keynes pulled in his “General Theory”.)
- Violence – does the myth in question reduce to win-win, or win-lose? If the former, it’s real. It works across time and space. But if the latter, it’s basically a pimped-up version of might makes right.
Hence civilisation, while good in principle, and resting largely on real myths, has a dark side: a tendency towards seductive, yet fake myths.
The second half of the book takes a look at contemporary civilisation, in particular that of the United States. As he argues, we have been and are being seduced by some dangerous fake myths that threaten to “De-Civilise” the country.
The first fake myth is that of fake money. “Real, durable money must be win-win money,” (p. 231) Bill explains. Today’s dollar, as it happens, falls far short. As an unbacked fiat currency that can be printed in paper or digital form at will, the dollar is fake, “win-lose money; it is a dishonest claim on wealth that was already created and is now in someone else’s hands.” (p. 240)
The result of a half-century of fake, win-lose money?
For the last 30 years, capitalists could take advantage of a special win-lose deal offered by the feds. In effect, the feds took money from the public—via taxes, artificially low interest rates, debt, and future inflation—and gave it to the elite. The insiders could borrow fake money from the Fed at a rate near zero (after inflation). And then, they could buy stocks and watch them go up from Dow 2,600 in 1989 to 36,000 in 2021. Or, they could do even better… with buybacks, mergers, bonuses, or special dividends, funded by the Fed’s win-lose fake money. (p. 244)
While nice for the elite, this is dangerous for civilisation. “As ye sow so shall ye reap. And when you put a lot of fake money into a society, you end up with a fake economy.” (p. 244)
Bill then turns to the fake myth of government planning and economic (mis)management. The largesse we have witnessed in recent decades is following an established, distressing pattern. The good aspects of civilisation – forms of cooperation – are being crowded out through various forms of relatively soft coercion such as high taxes and onerous regulations. There has been a huge turn away from win-win, free market exchange, to myriad government-directed, taxpayer-funded programmes.
While that might make government seem bad enough, it gets worse. In chapter nine, Bill turns his attention to the so-called “Deep State”. The fake myth, in this case, is that it doesn’t actually exist. Au contraire, explains Bill, citing the work of political scientist Mike Lofgren, among others.
Reminding us of former President Eisenhower’s prescient warning from his Farewell Address of 1961, Bill sums up the deleterious effects of all of the above win-lose dynamics:
Our working hypothesis in this book is that General Eisenhower was right. He identified two big temptations for the American republic of the 1950s; subsequent generations gave in to both of them. They spent their children’s and grandchildren’s money. In April 2019, the country had a national debt of nearly $30tn. That’s up from $289bn when Ike left the White House. And they allowed the “unwarranted influence” of the “military-industrial complex” to grow into a monster. No president [since], no matter how good his intentions, has been able to stop it. (p. 303)
By printing fake money, the Fed has enabled the government to run up huge, future-taxpayer-funded debts, that nevertheless must eventually be paid, or defaulted on. Either way, through either inflation or deflation, those young or as yet unborn will be shouldered with a burden to which they never consented.
Shouldering a burden without consent used to be called “slavery”. Today, it seems just a cost of doing civilisation’s business. Another is fighting endless wars.
As Bill makes clear: it doesn’t need to be that way. We could do with a little less of heavy-handed, top-down, government-directed civilisation, and a little more of the voluntary, cooperative sort. Although we would all need to step up and take individual responsibility for our own fate, we could be far better off with a healthy “civilisation detox” of sorts.
Speaking of our fate, Bill closes with some stoical thoughts. Power really does corrupt. We are witnessing this in our time. The US Deep State has created an expedient, fake myth of American Exceptionalism; of the US as the “indispensable” nation, as former Secretary of State Madeleine Albright put it. To paraphrase former President Richard Nixon, “If the US does it, it is not immoral.”
It is worth quoting Bill’s parting shot in full:
Certainty and ignorance vary proportionally, both on the individual and on the national level. The surer a nation is of its myths… its exceptionalism… its manifest destiny… its policies… and its position at the right hand of God… the more it is damned to Hell. (p. 382)
Until next time,
Investment Director, Fortune & Freedom
PS It isn’t just over the pond where our win-win freedom is at risk. Here in the UK, a central bank digital currency (CBDC) could soon be unleashed – and it could put your financial freedom at risk. That’s why I created this free report to explain what it could mean for you – and how you can protect some of your wealth from the threats a CBDC could pose.