(Interviewed by Louis James, Editor, International Speculator)
L: So Doug, what's on your mind this week?
Doug: Intellectuals – or rather, pseudo-intellectuals. I'm talking about a certain class of people who are not just a stereotype, but are a real group, who think and act in certain ways. They are a genuine menace. They're like worms or termites, eating away at the foundations of civilization. It's important to be clear on who and what I'm talking about here, because obviously being a person of intellect can't be a bad thing – I'm not advocating mindlessness.
L: The Collins English Dictionary defines an "intellectual" as:
1. A person who enjoys mental activity and has highly developed tastes in art, literature, etc.
2. A person who uses or works with his intellect.
3. A highly intelligent person.
Doug: That's a good definition, but it really only defines the platonic ideal of an intellectual… what an intellectual should be. But it doesn't capture the sense of current intellectualism, which is dominated by a certain mindset and driven by leftist political views rather than rational application of intellect to the issues of the day. In other words, being a real intellectual is a good thing – it's part of being a Renaissance Man who is fully developed intellectually, physically, spiritually, psychologically, and experientially; we're not talking about eggheads who live in ivory towers when we talk about real intellectuals.
By and large, if you look at the policies they advocate, these pseudo-intellectuals dislike the free market, they dislike personal freedom, and they actually dislike humanity. So most so-called intellectuals today are actually anti-intellectual – they're destructive of rational thinking. Take Paul Krugman and Thomas Friedman, whom we discussed a couple months ago… in fact most of the people you find in the New York Review of Books. You can't be sure whether they're knaves or fools – my guess is both. But they do a lot of damage. It's perverse, since all the intellectually honest people I know hold opposite views of those in the intellectual establishment.
L: Right – if you want to talk about a right-leaning intellectual, you'd have to say so, or most people would think the opposite.
Doug: Yes, but I hate to use the terms "right" and "left"; they're so ill-defined that they've become meaningless. Anyway, they're basically two sides of the same coin; both right and left are collectivists and statists. The left says they believe in social freedom, but that's a lie; and they definitely hate economic freedom, while the right says they believe in economic freedom, which also a lie; but they definitely hate social freedom. Only the libertarians and classical liberals consistently promote both social and economic freedom, and therefore work to liberate the best and noblest aspects of the human spirit.
You and I work with our intellects, but I'd cringe if someone called me an intellectual, because the term has become so degraded and has acquired such bad connotations. Spiro Agnew, who was Nixon's vice president, referred to such people as "pointy-headed intellectuals" for a reason; they may be intelligent, but they lack common sense. That tends to make them bad at business – smart as they may be, most intellectuals are poor as church mice – which may explain why they tend to be so hostile to enterprise.
There's a story – possibly apocryphal – about Karl Marx, who spent most of his life in poverty. It's said that his wife once told him that he should stop writing about capital and go out and make some.
L: [Laughs] I've heard that one too… but I've noticed that a lot of hardcore libertarians don't have two quarters to rub together – and they're as pro-market as you can get.
Doug: That's true. Libertarians understand the theory, but they fall down on practicing it. Why do you think most so-called intellectuals are thinly disguised or open socialists?
L: I suspect it's a personality type. Some people respond to the challenges of life with a desire to overcome, to achieve, to win. Others respond with a desire to seek protection, to avoid risk, to be given what they are not confident they can go out and get on their own. How much of this is nature and how much nurture, I can't say; but it often seems that those who want to force the world to guarantee happiness to all are not just unwilling, but are completely incapable of seeing things differently. Their core values don't allow them to see or believe facts that contradict their cherished notions.
Doug: It's interesting that you put that in terms of their values. I absolutely agree, and wrote about this in Crisis Investing for the Rest of the 90s. I referred to these types as "The New Class"; there are a lot more of them now than there were even then. Let's see… I've got a copy right here. There's a chapter – 31, The New Class in the No-Fun Nineties – on the kind of intellectuals we're talking about:
The New Class is less a political than a socioeconomic grouping. The term was originated by Milovan Djilas, a renegade Yugoslav Communist, but has been best described in the United States by Irving Kristol, B. Bruce-Biggs, and Herman Kahn. Robert Reich, Clinton's chief economic advisor, calls them "symbolists" or "symbolic analysts." They are concerned with what Marx termed the "means of production," but they do not deal with them directly. You will not find members of the New Class farming, mining, manufacturing, inventing, or working with their hands. In other words, they are less interested in experimenting with nature, tinkering with technology, or manipulating physical reality than in experimenting with human nature, tinkering with politics, and manipulating society.
These people trade in symbols, words, and concepts. Typically they are writers, editors, producers, media people, mid- to upper-level bureaucrats, academics, entertainers, lobbyists, lawyers, planners, artists, analysts, consultants, and employees of charitable organizations. They are the direct descendants of scribes and priests.
I went on to describe their values, which I agree with you – they are not open to debate, subject to reason, or ever, ever questioned. Incidentally, I generally disapprove of what Reich and Kristol in particular stand for. Herman Kahn was a friend of mine, although somewhat problematical philosophically; but he was a genius and great company.
L: It seems all too few people actually think about their values, why they hold them, and what the consequence of those values are in their lives – but it's crucial for people to do so. Values determine decisions, which are implemented in actions – the sum of which is a person's life and very being.
Doug: Well said, and totally true. It's interesting to me to look at this list, describing the characteristics of the New Class which I wrote in 1993, in light of what these people have done since then. They've completely captured the media, government, large corporations, NGOs, and academia. They now control the world of ideas and what the public believes is right.
Remember what I said about these pseudo-intellectuals being more concerned with controlling other people than with controlling nature and developing technology? Here's what I wrote back then:
Technology. The New Class is deeply suspicious of technology. Few of them have had any real scientific training, and almost none has had any exposure to engineering, so very few have a practical understanding of technology per se. People naturally fear anything they do not really understand. They want to control scientists and engineers who, they are convinced, do not have the wisdom, which mostly resides in the New Class, to employ their powers appropriately. The New Class thinks that technology mostly leads to bad results. Their tendency is to decrease automotive pollution by decreasing driving 50 percent through punitive regulations rather than to encourage installation of a new device to cut pollution by 99 percent. Since they mistrust mankind, they do not want them to have much power over the environment, hence the technophobia that accompanies the "back to the earth" movement. And that, of course, is another major theme.
L: Neo-Luddites. It's a bit Kafkaesque going to anti-globalization protests and seeing these anti-capitalists organizing their demonstrations via social networking software on their Apple computers. Looks like you saw the green hysteria rising…
Doug: Well, I didn't see how bad it would get and how it would mutate and metastasize… Like the insanity of deciding that carbon is bad for carbon-based life forms – like us. I didn't see that they'd declare war on the periodic table of elements, with carbon being a major villain. But I did predict the rising religion of "greenism":
Ecology/Environment. Greenism is becoming a new religion, where "ecology" is a deity to whom worshipers must offer sacrifice. Religion offers a pretty good analogy, and not just because it's also historically antitechnology. Greenism could replace traditional religion for a large portion of the population in the decades to come, even though its views are at odds with the Jewish, Christian, and even Muslim doctrines that give mankind direct dominion over the world. I find this an interesting subtheme, if only because I have always been sympathetic with the Nordic and Celtic cultures that prevailed in pre-Roman, pre-Christian Europe. They were probably the most libertarian cultures in the history of the world, with strong emphasis on personal privacy and property rights and a respect for nature. But only their nature-worship aspects seem to be emphasized in New Class circles.
Despite a generally antiscientific bent, the New Class will cite science when convenient, usually out of context. In any event, science takes a backseat to the hysteria that is socially acceptable when it comes to environmental issues. Even the most remote possibilities of disaster are taken seriously and arouse calls for instant government action that are often based on inadequate data, poorly thought through, and often counterproductive. Cost-benefit calculations are rarely done and are imprecise when they are done. Instead, the New Class tends to believe that the ends justify the means, no matter what the means may cost.
I can see now that I was too conservative and understated the problem.
L: The adoption of the "precautionary principle" – the idea that no new things should be allowed until they are proven safe – by so many greens shows that you were spot on. Never mind the transition from agrarian to industrial society or now to the information age: the precautionary principle would have kept our species from becoming cavemen, as it would and could never have been shown that it was safe to come down from the trees.
Doug: Sad but true. These people actually hate the idea of the ascent of man and dislike the concept that mankind’s destiny lies in the stars. And it connects to what you were saying about this personality type hating risk and seeking safety. That relates to the next problem area:
Health and Safety. The New Class believes man incapable of making a rational or informed judgment about what risks he accepts. Like many who enjoy privileged lifestyles, the New Class tends to be afraid of risk or change. As a result, even the normal risks of living are blown out of all proportion. Since the New Class is better educated and more sophisticated than the population at large, it tends to believe it knows what is best for the "masses." The end product, of course, is a busybody mentality, which is only natural, since social workers, politicians, and pundits are really only professional busybodies; their job descriptions are to set standards for others and then make sure those others conform to their standards. And, after all, if "society" is going to pay the costs of an individual's sickness or injury, it follows that society's New Class guardians should ensure that the individual behaves appropriately, regardless of whether or not those who have to obey the rules, and pay taxes for the privilege, like it.
L: Sounds like the bioethicists we were just talking about.
Doug: Bioethicists are a newly minted subclass of the group we're talking about. Take their focus on a "fair and equitable health care system." Instead of unleashing the power of the marketplace to advance medical technology, they want to set up a vast bureaucracy, which they – of course – will control. It's part of the notion of "social justice," about which I wrote in this chapter almost 20 years ago:
Social justice. The New Class translates social justice as not just equality before the law or equality of opportunity, but as equality of income and standing. In their calculation two wrongs can make a right, which is what "affirmative action" is all about. As a result, people are treated not so much as individuals, but as members of racial, religious, or other groups. This serves to entrench the very problem the New Class claims to want to solve, and as a bonus sets up an atmosphere for class warfare.
L: Or, to put it back in my more psychological way of looking at it, this personality type, which fears risk, doesn't want equality of opportunity, but equality of outcomes. Equal opportunity is possible in a free society – it is, perhaps, one way of defining a truly free society. But freedom to risk for greater gain is also the freedom to fail and have to start again. That won't do; in this worldview, everyone must succeed. They think everyone doesn't have just a right to try to succeed, but a right to success – whether or not they earn it. Everyone should have a car, a home, education, medical services, and much more. It never occurs to them – they cannot allow themselves to ask – how these things can all be guaranteed without the power to compel some people to provide them.
Doug: Yes, but it's not just economic ignorance, it's willful economic ignorance. They think they know how things "should" be… know what path economic development should take for everyone. And they're not only willing but enthusiastically anxious for the state to enforce it. End of discussion.
Economic development. Much emphasis was placed on "jobs" during the 1992 elections, although exactly what that meant wasn't made clear. A process of elimination is helpful. We know jobs in fast-food restaurants aren't socially acceptable, and factory and other repetitive work is behind the power curve. But the world is not yet ready for everyone to be a TV producer, lawyer, lobbyist, consultant, or some other kind of symbolic analyst. What kind of job might the candidates have meant? It's tough to create productive work for people when you do not let the market tell you what it wants. But the New Class will tell the market what it should want. That is called an "industrial policy."
Of course the government can create jobs by hiring people for public works projects, shoring up the country's deteriorating infrastructure. (The paradox of why the government-owned infrastructure is collapsing, but privately owned buildings are well maintained, is never addressed.)
Another alternative brought forward by those who believe in an industrial policy is to make large grants to large companies to employ large numbers of workers. One alternative not likely to get wide attention is the firing of government employees and the elimination of taxes and regulations to get the economy moving. The peer pressure, social opprobrium, and moral approbation – and overt regulations – arising from New Class values result in the fact that people tend to work less hard, take fewer risks, and seek more leisure. Obviously, everyone makes these choices for themselves, but if the Wright brothers had to develop an airplane in today's environment, they likely would have become discouraged before they succeeded.
L: Wow – you sure called that one right. It's as though the Obama administration read your list of things not to do and adopted it as its game plan.
Doug: No crystal ball was required. That government will do not just the wrong thing, but the exact opposite of the right thing, is one of the safest bets any speculator can make. It stems from the New Class' clear fear and loathing of having to compete and win in the free market.
Free markets. Since the manifest bankruptcy of socialist systems around the world, it has become less fashionable or credible to deny the benefits of a free market. Instead the emphasis has changed to "perfecting" the markets through a government-private "partnership" of "national industrial policy," "targeted spending," and other euphemisms for planning, directing, and controlling the economy.
The trouble with the market's "invisible hand" is that it moves too slowly to suit people who want results while they are in office. Although the results may be what the market – that is, most people – wants, the New Class believes the majority of people do not know what is in their best interests. The New Class will grudgingly acknowledge that free markets and capitalism can be "efficient," but then claim they aren't adequately "moral," i.e., in tune with the values of planners. Regulation is likely to increase, not decrease.
L: Okay – I can see that no crystal ball was required for that one. In spite of some deregulation in the Reagan era, the pathology of government is to always increase its power over every level of economic activity, to the detriment of innovation and entrepreneurship.
Doug: Entrepreneurship is the next one:
Entrepreneurialism. Entrepreneurs and businessmen in general are held in low esteem by the New Class. Businessmen employ workers, which leads to the presumption that they also exploit them. They advertise, which means they "induce" people to buy things they don't really "need.'' They make a lot of money, so they are expanding the gap between rich and poor. New Class attitudes toward business are similar to the attitude of European aristocrats toward work in general: it is best left to the lower classes and those who haven't found a way to rise above it. The fact that businessmen are typically "doers" leads the New Class, who see themselves as "thinkers," to look down on them. It's a culture clash, and businessmen are viewed suspiciously, unless they can prove their social value in some way other than just making a profit. Someone who makes a million dollars producing a new razor or a cancer cure is looked upon as if he alone, and not all of society, were the beneficiary.
L: Ayn Rand spoke about this in her last speech, when she touched on the self-destruction of the American businessman.
Doug: That fits in with the fall of the America that Was we've talked about before. And that relates to the last of set of relevant values I wrote about in '93:
Traditional values. Boy Scout virtues are out and radical chic is in. Nineteenth-century values (courage, perseverance, responsibility, and achievement) are out. John Wayne is unhip; Alan Alda is a more acceptable male role model. Some lip service will be paid to traditional values to appease the silent majority. But these traditional values are pretty much held in contempt by the New Class. "Alternative lifestyles" will likely meet with tacit approval, if not encouragement. That's not to be confused with the get-along-go-along tolerance for, and encouragement of, diversity typical of libertarians. The New Class harbors an active dislike for "middle-class values" and a desire to create a new set of values. In the process it may create the conditions for active class warfare.
L: That reminds me of something I think Nathaniel Brandon once said of those who hold this worldview. They claim the moral high ground and berate us, saying: "You must love everyone – or we'll kill you."
Doug: [Chuckles] That's exactly the sort of New-Class arrogance I was writing about.
L: All good – but that was, as you say, almost 20 years ago. Would you change the list or update it in some way?
Doug: Not really, except to say that the views of these people have not only gotten more extreme, they have become more widely accepted. They're now insinuated throughout society, they're accepted as givens, and have corrupted people's assumptions. So it's rather predictable that personal freedoms are vanishing and the world is moving toward a "kinder and gentler" – to use the moronic Baby Bush's words – version of Orwell's 1984.
L: Okay… Investment implications?
Doug: Well, it's yet another argument in favor of the view that things will have to get worse before they can get better. The next stage of the Greater Depression might change a few things… Fortunately or unfortunately, depending on how you look at these things, that's exactly the direction things are headed. I'd like to invite everyone to come and discuss things like this with us in Florida at the end of this month, but I think our Recovery Reality Check Summit is sold out.
L: We could – as Gordon Liddy used to say – be crass and commercial and mention that we'll produce an audio collection of the event.
[If you will not be attending the Casey Research Recovery Reality Check Summit in Florida, you can still hear every recorded presentation. Order now and get a $100 pre-production discount.]
Doug: You just did, so I'll consider it done.
L: Any chance of a more positive conversation next week?
Doug: Well, if things getting worse is a step toward things getting better, we've just had a very positive conversation. As you know, I always like to look on the bright side. But on the other hand, I have to say what's on my radar now are more signs of World War III approaching.
L: Okay, Mr. Optimist. I'll just keep singing in the rain.