Elsewhere in this newsletter I’ve half-argued the case that we’re headed, not for a repeat of the inflation of the 1970’s, but for inflation on steroids. Here is my perspective on all the issues we face, including that one:
The Global Capitalist Revolution. We underestimate its power, perhaps because its force is generated by two relatively small minorities. They are the savers and the entrepreneurs, especially the entrepreneurs – the business people who know no limits to their own creative energy. This revolution has been growing for nearly three hundred years, its spreading across the globe, and its transformative capacity is boundless. It is not going to be stopped by the megalomaniacal ambitions of a KGB thug. Ditto, the divisive rhetoric emanating from the political posers in Washington, D.C., and the Fed’s Keynesian thimblerig. In fact, I think all these things are but the death rattle of arrogant and repressive political philosophies, inconsistent with human nature.
The Global Capitalist Revolution, which arose in mid-eighteenth century Great Britain, had by about 1980, enabled almost two billion people worldwide to attain a lifestyle that had become known as “middle class”. Since the fall of The Berlin Wall in November of 1989, another three billion people have emerged from the darkness, half a billion of whom could now be considered well-off. World-wide, nearly one hundred and fifty million people are ascending out of poverty each year; and there will soon be a five billion person middle class inhabiting the Earth. In a few short years, the value of their output will very likely dwarf the production of the past three centuries. Production is the one thing that can both fight inflation and pay down government debt.
From the beginning of the Global Capitalist Revolution, Great Britain needed one hundred and fifty years to double its per capita income. From its Civil War, America achieved that standard in thirty years. China and India have pulled off a similar feat on a much larger scale, albeit from a lower base.
Africa now has six of the ten fastest-growing economies in the world since 2010, and it’s projected to claim seven of the top ten spots by 2015. The financial services sector in Africa is expected to grow by forty percent annually to 2020. Apple is expanding its African stores, intending to sell more than a billion iPhones in the next five years. Maybe these are the reasons why rock star and social activist Paul David Hewson (stage name, Bono) says that capitalism is what Africa needs more of, not foreign aid. It was “a humbling thing” he says, “to learn the role of commerce.”
In Mongolia’s southern Gobi desert, British and Canadian firms are partnering to develop one of the world’s richest copper mines, with gold and coal mines already in production. There’s a sixty-mile highway and a modern railway running from Oyu Tolgoi into China, and a mile-long air strip that can accommodate 737 and C-130 aircraft. New schools are being built. Imagine!
Yes, we have our scars, physical and financial; and we have unhealed wounds, too. But, the vast preponderance of the historical evidence makes me a firm believer in the economics of freedom, and in the ultimate triumph of truth. So, the idea I most want you to engrave on your brain today is that human beings flourish when information flows freely. All top-down political solutions—including Keynesian top-down banking and such sacred cows as Social Security, Medicare, Medicaid, and Obamacare—depend upon the public discounting of truth. (The truth is that all of these programs discourage personal responsibility in varying degrees; and more to the point, they will—if not reformed—eventually bankrupt the nation.) But, history teaches us that human problems arise and are then solved. The flow of information can be slowed, but not halted. Even now, the flow of information is accelerating. My bet is that in the great sweep of The Global Capitalist Revolution, today’s problems, by which I mean all of them, will be whisked away by the exponentially expanding bandwidth of human knowledge. The Global Capitalist Revolution—really a special case of the Information Revolution, which began with the invention of the printing press—has only just begun to transform the world. mh