Daily Dispatch: A Dictatorship of the Majority

July 07, 2010 | www.CaseyResearch.com A Dictatorship of the Majority

Dear Reader,

Over the long weekend we watched Harold and Maude, the 1970s cult classic. While the years haven’t been kind to many movies of that vintage, Harold and Maude struck us as not having lost anything to the cultural transition.

Therefore, if you are looking for something a little different but altogether life affirming, I’d highly recommend it. An added bonus is the soundtrack by Cat Stevens. In fact, as I write, I’m listening to a live version of one of his songs,
Miles from Nowhere


In his time, Cat Stevens was one of the most talented lyricists and musicians on the scene. Then, at the apex of his career, he suffered what was likely an artistic crash. While his tidied-up
Wikipedia page

attributes his subsequent conversion to Islam to a near-fatal drowning incident after which he changed his name to Yusuf Islam and turned his back on music (until recently) my quirky memory recalled him having legal trouble related to stalking a stripper, a sure sign of a tormented soul.

It is a tragic flip side of human nature that, rather than celebrating and enjoying exceptional success, so many people instead suffer a meltdown. One day they are at the top of their profession, and the next they are slinking around strip clubs or lurking in public restrooms, or slipping behind the wheels of their cars while sloppy drunk, then compounding a bad situation by unleashing racist tirades when nabbed.

This tendency to go moth-like to the flames of self-immolation doesn’t stop with individual humans but can suck in an entire culture. As I have previously shared, perhaps the single best example of that is provided by the ancient Hawaiians who, finding themselves in absolute paradise, set about inventing over 2,000 “kapus” or laws, transgressions of most of which were punishable by death. One minute, paradise, the next a hell where the shadow of a prince falling on you was a quick ticket to summary execution.

The U.S. of A. provides yet another useful example of this phenomenon. Blessed by broad ocean-bound borders on two sides, and no real threats from the top or bottom, the country has been free from the constant invasions that have tormented the European principalities and their successor nation-states for time immemorial. Coupled with a legal birthright founded on the idea of “Live and let live,” the extreme success the country enjoyed in its youth should surprise no one.

Unfortunately, rather than remaining true to its founding principles, successive leaderships have led the country deeper and deeper into foreign entanglements, and further and further down the road of populism of the sort that has left Europe gasping for breath.

The situation has now reached a crossroads. In one direction, the direction we here at Casey Research steadily advocate, there is real hope. That hope is based on remembering the principles of self-reliance that made America so economically powerful in its early career a haven with a relatively short list of reasonable laws and regulations, administered by a minimal bureaucracy supported by a modest and simplified tax code.

Economic historian Niall Ferguson recently commented on the surprising lack of dialogue about this path in America. You can, and should,
watch this video here

. (Thanks to steady correspondent Nitin for bringing this to my attention).

Unfortunately, not only are the politicians, of both stripes, not talking about a return to policies based on sound principles of economics to wit those that support the creation of wealth but they are continuing to float all manner of new and damaging ideas for “governing” the nation out of the crisis. Starting with hefty increases in taxes and regulations, actions certain to have exactly the opposite effect.

And it could get a lot worse than that.

Case in point, there was a discussion on BBC radio yesterday about a growing number of voices from the environmental community who are now calling the very principle of democracy into question. The basic thesis is that by encouraging short-term thinking, a democracy is unable to deal with long-term problems in this case, the climate change these true believers see coming 50 or 100 years down the road.

Of course, while they are misguided to the extreme on the environmental concerns, they are technically correct about the whole short-term/long-term thing. That’s because the only thing most politicians are interested in is getting reelected two or four years down the road. Anything outside of that time horizon is of no real import, other than as script elements for political theater.

I also find much to dislike about democracy, preferring instead the simpler system of a republic based on certain inviolable rights. For example, private property is sacrosanct and can’t be taken away for failing to pay a tax or because town managers come to believe your land would be well suited for a convention hotel.

Even so, it concerns me greatly to find my steady disappointment with our degraded democracy which is little more than a rush to the slopes at this point to be shared by members of the environmental movement. I don’t know much, but I know for a certainty that their version of what the country should transition to, and mine, differ dramatically. This is not just idle speculation, as I increasingly think we’ll see a serious transition in the nation and in much of the world resulting from this crisis. Much in the same way that the cascading crisis of the 1930s led to FDR, war, and a fundamental rearrangement of global power.

So, what’s the world going to look like a decade from now? Less government, and what there is strictly collared by hard rules that protect the rights of the individual?
Or more government, where the rights of the individual are all but overrun in the interest of the greater good?

Unfortunately, based on the signs now popping up, I have to believe the odds strongly favor the latter scenario. In the last Great Depression, many of the tools for what might be termed a dictatorship of the majority simply didn’t exist in the body of prevailing law until FDR began pulling the levers.

Since that time, things have gotten steadily worse until the point that Americans now sit on their hands while the government rounds people up and holds them without trial, or invades other countries on false pretenses, then continues the farce at the cost of trillions of dollars. Then there is the federal takeover of one large swath of the economy after the next.

Put another way, at this point the slope has been well greased for government to do pretty much anything it wants… all in the name of the greater good. With that being the case, all that’s needed now for things to get really ugly is the right impetus.

I suspect that won’t be long in coming. Whether it’s war with Iran, now made all but inevitable by the U.S.-led sanctions preventing key commodities from reaching the citizenry… or the next leg down in the eurozone, followed by a loss in faith by bond traders about the similarly dismal outlook for Japanese and U.S. finances, we are approaching a tipping point.

Which brings us back to the lack of debate about rational approaches out of this crisis referenced by Ferguson. Unless and until that debate is well joined, you must take it as a given that things are only going to get worse from here. And then they are going to get really bad.

Maybe so bad that the push by some in the environmental community to toss over key concepts of democracy could come to pass. Of course, for them to promote this idea is naïve to the extreme, because in the dictatorship that follows, the environmentalists would likely be the first up against the wall.

On this general topic, this week we continue with short video clips of my dear partner Doug Casey excerpted from The Fall of America video series. In today’s installment, Doug discusses some of the worst of what he believes is to come.
Watch it here

Then, if you so desire, you can learn more about the entire high-quality, 9-disc video series by clicking here.

End Notes

I’d like to close for the day by stressing our view that we’re on the edge of an economic precipice.

As explained in this month’s edition of The Casey Report, published last night, this next leg down will likely take pretty much everything down with it, including most commodities and even the precious metals. That said, we see any downdraft in the precious metals, and especially gold, to be short lived and nothing to worry about. Which is to say, if you are looking to add positions, you can view any continued setback as good news. Gold stocks are also likely to come under pressure, but, again, as people remember those securities are attached to gold, they’ll do just fine.

Continuing for a moment on this topic, over the weekend I spent time with a friend who is a very highly placed Wall Street exec and over the course of our discussion learned that he and his colleagues concur with our view that things are about to get ugly. You could call him a reluctant bear because, as he correctly points out, it’s a lot harder making money in a bad market. The idea at this point is more about not losing, so don’t be afraid to hold some extra cash in here.

Finally, for today, we received a number of emails from dear readers complaining about our man in Washington, Don Grove, using the phrase “right-wing nuts” in conjunction with a mention of Rush Limbaugh and Glenn Beck. This was a misunderstanding, a case of Don trying to be sarcastic, which is why he used quotation marks around the phrase. Don is on the record as a fan of Limbaugh and Beck.

Speaking personally, while I think Limbaugh has shown himself to be fully human and a hypocrite by calling for the death penalty for drug users while being an addict himself and Beck tends to go a bit overboard, they bring a lot of value to the policy debate in this country. That they are so vilified by the socialist/populists is a direct result of the fact that their views resonate so strongly with people who stand in opposition to the current leadership.

While I consider myself more of a libertarian with anarchist leanings than a conservative, economically I’m on the same page as Limbaugh and Beck. In the final analysis, however like all their peers in the talk show community these guys are mostly just media personalities pulling a paycheck, so one shouldn’t take them overly seriously.
And with that, and with my apologies if I have further offended anyone, I will sign off for the day.

Until tomorrow, thank you for reading and for being a subscriber to a Casey Research service. On that topic of subscribing, I’ll leave off by mentioning we are still offering three-month, no-risk trials to The Casey Report, in case you’d like to view the current edition for yourself. Love it, or get your money back. Details here.

David Galland
Managing Director
Casey Research