The Rise of the Praetorian Class

Dear Reader,

As I am just coming off a grueling stretch of almost non-stop writing – much of it related to this month’s edition of The Casey Report, published yesterday (get it while it’s hot) – I am approaching the matter of these musings this morning with a somewhat fuzzy mind and a throbbing right hand that may (but I hope doesn’t) signal the early onset of carpal tunnel syndrome.

Fortunately, fellow La Estancia de Cafayate property owner Pete Kofod has kindly offered to let me publish a paper he has finished just this morning on a very important topic – the rise of the Praetorian Class. A former military officer himself, Pete knows what he writes about, and he writes about it very well.

Before getting to that article, however, I'll mention that one way I am trying to mitigate any further immediate damage to my digits is by switching back to the Dragon Speaking program that I have mentioned before. Those are the same folks that produce the Dragon Go! iPhone application that I reviewed last week. Their core application allows you to talk into your computer’s microphone, and almost magically the words instantly appear on the page. As it has been some time since I used the program, I decided to upgrade to the latest version, Dragon Speaking 11.5, and I have to tell you, I'm pretty impressed. Actually, make that I am very impressed.

Not only does it let you dictate almost without mistake into any number of formats, the latest versions also allow you to call out commands to your computer, for example to search a website or to open or save a file, and much, much more.

Most important for those of you who write is that the accuracy of the software in its core transcription function has only improved and is now probably over 98%.  

As a parent with school-aged children I have, until fairly recently, encouraged them to learn how to type, the faster the better. However, like my correct early call that e-books would increasingly make paper books irrelevant, I have come to believe that the efficacy of voice transcription software makes it almost certain that it will replace typing for most applications. It won't happen overnight, but I am convinced that it will increasingly dominate all functions related to word processing.

Of course, there is one obvious drawback to transcription software, namely that you have to speak out loud in order to put the words on paper. While that works fine for me in the splendid isolation of my basement home office, it will not work so well in a crowded office environment. Then again, the widespread adoption of cell phones has already greatly lessened the social stigma of talking out loud in public, even when talking about what sounds to the unwilling eavesdropper like quite personal matters.

In time, however, I suspect that the work now being done in brain computer interconnectivity may very well advance, so that instead of speaking your thoughts onto paper, you'll only have to think those thoughts. But enough of these idle musings, there is work to be done.

And so it is my great pleasure to turn the page over to Pete Kofod.


The Rise of the Praetorian Class

By Pete Kofod

Much attention has been paid to the “disappearing middle class” and the “vanishing American Dream.” While the observations are largely accurate, they are also misleading. The traditional three-tier model of the upper, middle and lower class broadly categorizes people according to income and net worth. One significant problem with this model is that membership in any particular class is very much in the eye of the beholder. One man’s “scraping by” is another man’s “opulent living.” This subjective and arbitrary grouping and boundary assessment inevitably gives rise to the simmering class warfare that is starting to rear its ugly head in many Western countries. Such categorization is therefore meaningless at best, if not outright deceptive as it conflates a variety of economic actors.

The chief fallacy of this model rests in the fact that it focuses on how much those actors are compensated, as opposed to how and why they are compensated. A far better perspective is perhaps gained using two classes, the Political Class and the Economic Class, with a third class emerging.

The Butcher, the Baker, the Candlestick Maker – The Economic Class

The Economic Class, at least in the United States, has historically been the numerically dominant group, although in recent decades its dominance has noticeably waned. The economic class would traditionally be called the Private Sector, but even that term has become misleading for reasons we will delve into later in this article.

Members of the Economic Class provide goods and services that are voluntarily sought by consumers and paid at rates that the market will bear. In an unfettered environment, the economic class would count farmers, engineers, coal miners, artists, physicians, janitorial staff, security guards, merchants and company executives among its membership. They participate freely and competitively in the market place, using the economic principles of Division of Labor and the Law of Comparative Advantage to increase the wealth of society as well as improve their personal position. Capital, entrepreneurial and human resources are brought together collaboratively to meet the needs of the market place. This is standard Economics 101 fare and hopefully generates little controversy among the readership. The important factor defining Economic Class membership is not the amount of money a person earns but rather their participation in the free and open market.

The Lazy Highwaymen – The Political Class

Like the Economic Class, members of the Political Class are not properly defined by their wealth but rather by how they exert influence in the market place. Whereas members of the Economic Class engage the market openly and voluntarily, members of the Political Class employ coercion and deceit to achieve their economic objectives. The coercion and deceit may either be exerted directly or, as is increasingly observed, through a variety of proxy agents. The most obvious members of the Political Class are, unsurprisingly, politicians. This group includes elected individuals at every level of government as well as various appointed officials.

In addition to this primary membership category, a second distinct group exists within the Political Class. It consists of various advocates including lobbyists, influence peddlers and miscellaneous other supplicants of government cheese. These creatures exist to serve as envoys for the third distinct group, which is made up of a patchwork of commercial entities that have learned that employing a politically well-connected pitch man replaces the need for an effective sales and marketing organization and in some cases even the requirement to have a desirable product.

Furthermore, it is commonly observed that members of the Political Class routinely migrate between the three aforementioned groups. An unfortunate consequence of allowing these economic actors to “cut in line” is that the rewarded event becomes the prevailing trend. Because of that, there is virtually no industry that has opted out of the rent-seeking game. From the military-industrial complex to agricultural subsidies, to the utterly corrupt banking system, the Political Class is inexorably claiming an increasing share of the world’s economic activity, a highly disturbing trend indeed.

Subsidized inefficiency, intentional destruction of productive assets and confiscation of property are but some of the effects that are observed when the Political Class employs force to serve those that are “more equal than others.” The arrangement can be summed up by saying that economic activity within the Economic Class places the bargaining power in the hands of the buyer whereas the economic activity within the Political Class places the bargaining power in the hand of the seller. This gives rise to dislocations in the free exchange of goods and services as well as widespread misallocations of capital as businesses adjust their practices based not on the normal mechanics of supply and demand but rather based on the dictates of the Political Class. Over the years, the scale of the intrusions of the Political Class into economies around the world, and very definitely here in the United States, has grown to the point where truly free markets are now the exception and not the norm.

Because the Economic Class operates in the realm of voluntary exchange whereas the Political Class employs force to achieve its objectives, many of which are anathema to the Economic Class, it follows that a significant amount of resources must be dedicated by the Political Class to the enforcement of their objectives. This role has traditionally fallen on the wide array of military and law enforcement organizations as well as numerous regulatory agencies and departments.

From the US military’s role in protecting the Political Class’s global interests and the IRS keeping the Treasury full, to the FDA serving “Big Pharma” and various law enforcement agencies maintaining a low-level chronic fear in the populace, the level of physical control that the Political Class needs to extend over productive resources is staggering. And in lockstep with the virtually unchecked growth in the Political Class, so has grown the size and scope of the enforcement branch deployed to protect its interests.

Paradoxically, for reasons I’ll touch on momentarily, the allegiance of this enforcement branch belongs to neither the Political Class whom they serve nor the Economic Class whom they “service.” In time, their level of influence grows to the point in which they become a class of their own. They are the Praetorian Class.

Legions and Lictors – the Praetorian Class

The Praetorian Class includes members of the Armed Services, federal, state and local law enforcement personnel as well as numerous militarized officials including agents from the DEA, Immigrations, Customs Enforcement, Air Marshalls, US Marshalls, and more. It also includes, although to a lesser extent, various stage actors in the expanding security theater such as TSA personnel. The main mission of the Praetorian Class is to keep the order of the day. This requires displaying an intimidating presence in their interactions with the Economic Class.

As the Praetorian Class ascends, the clear, albeit unstated, message that emerges is that actions and events in the Economic Class only occur with its tacit consent. Whether driving on roads, traveling in the air, visiting public land, walking down the street or even living in your own home, every action you take is predicated on its permission. By preconditioning the populace to enforcement of its edicts, most of which are completely arbitrary, the Praetorian Class sets itself up for a high degree of autonomy in its actions. This is confirmed by the fact that consequences for malfeasance within the Praetorian Class are almost never observed, and when it happens, it typically becomes a grotesque spectacle in which one of their own is sacrificed as an example, so as to keep appearances of effective internal controls.

Members of the Praetorian Class are typically recruited from the Economic Class and usually from the lower socio-economic spectrum, which offers them an opportunity for personal and professional gain that otherwise might be out of their reach. Early on in the training and indoctrination process, a strong emphasis is placed on teamwork and advancing the welfare of the team above the individual. While independent thought is never overtly discouraged, the fact is that questioning authority and failing to display complete loyalty to the team results in censure, shunning and even expulsion. Naturally, the recruit learns in short order which behavior is rewarded and responds accordingly. This forges a lifelong, unbreakable bond between the brothers-in-arms. This bond can be observed when people proudly display unit insignia and decorations decades after their departure from service.

As they serve in their martial role, members of the Praetorian Class learn to despise members of the Political Class and to view the plight of the Economic Class with detachment or even contempt. Law enforcement and military personnel will converse behind closed doors about the most horrific injustices and brutalities with cavalier amusement. While perhaps natural, their training for violence and teamwork is a fundamental cause for why members of the Praetorian Class abandon their roots and in time come to view their peers “back on the farm” with contempt. Likewise, the steady displays of the craven and treacherous character of the Political Class causes the Praetorian Class to privately disavow emotional allegiance to their masters, usually early in their service.

Naturally, as the members of the Praetorian Class socially distance themselves from both their origins and their masters, even though they are paid to do their bidding, a new group identity among them emerges. Adoption of this group identity, forged by the training, indoctrination and work, defines membership in the Praetorian Class. Some of the characteristics of this identity include:

  • Viewing everything and everyone according to a perceived threat posture. The members’ thought processes, beliefs and actions center on viewing the world through a paradigm of a graduated conflict spectrum and how to posture themselves accordingly. Even in the most mundane settings, their conversations tend to be awkward if not centered on their martial duties.
  • Tight internal socialization. Because they view life through a martial paradigm, members tend to socialize almost exclusively amongst themselves. Immediate family members are expected to do the same, which naturally occurs anyway as they can share experiences that external relationships simply are unable to address.
  • Loyalty is the highest honor. Whether referred to as the blue wall of silence or the brotherhood in arms, even the most egregious transgressions are buried. If the misdeeds are internal, meaning member versus member, the justice is handled internally. On the other hand, external missteps are typically swept under the rug and significant chicane is experienced by outsiders who seek to learn the truth.

In a relatively free and peaceful society, members of the communities that form the Praetorian Class lead a discrete existence. Members of the military commute to and from their place of work and are largely invisible to both the Political and Economic Class, certainly in communities that are not “Praetorian” communities. Attendance at cultural events in uniform is frowned upon, if not explicitly forbidden. During these times, members of the military and law enforcement are expected to live and operate outside the perception of other members of society, their purpose and function regarded with a sense of detachment and perhaps even subtle curiosity.

As the Political Class increasingly calls upon the Praetorian Class to ensure their order, however, their martial nature becomes more visible in the fabric of day-to-day life. This serves several purposes. For one, it allows the Political Class to demonstrate its willingness to use unlimited force to achieve its objectives, something that was always the case but is now made publicly visible. Rationalizing the increased public profile, a stream of honorifics is bestowed upon the Praetorian Class so that they may be presented as defenders of the Economic Class. This is accomplished through the time-tested use of pageantry, pomp and circumstance.

Over time, additional perquisites are bestowed upon the Praetorian Class including preferential treatment in both private and public facilities. Preferred air travel accommodations for uniformed personnel, including dedicated lines at TSA checkpoints and preferential boarding, have recently emerged as cultural standards that further distance the Praetorian Class from the masses.

Another clear change is the physical appearance of members of the Praetorian Class. The uniforms transition from relatively inconspicuous attire to “battle uniforms” such are those now standard issue to both the military and law enforcement personnel. These optics reinforce the position of the Praetorian Class as maintainers of public order, convey a message of physical dominance and establish chronic low-level fear among the masses. Sometimes referred to as the militarization of the police force, this characterization traditionally refers to the increasing firepower in even municipal police departments. Frequently lost in this observation, however, is the psychological impact that such a heavily armed police presence has on the “civilian” population – specifically that it further separates the Praetorian Class from the Economic Class.

As the influence of the Praetorian Class grows, so do the resources it consumes. This is manifested in the form of continuous “equipment” upgrades, training budgets and costly “interagency collaboration” in addition to the usual staff augmentation. This, of course, has the ancillary benefit of directing resources to equipment and service providers that are favored by the Political Class and in some cases may in fact be the primary purpose.

Perhaps less obvious is the need to constantly keep the Praetorian Class on the march. A bored Praetorian is a dangerous creature that will start looking for things to do. In order to keep the Praetorian Class engaged, they must be fed a continuous source of adversaries that they in turn actively engage. In “peace time,” actual engagement is replaced by training and rehearsing the defeat of the adversaries.

While the Praetorian Class emerges as its own entity, with allegiance only to the members' peers, the most senior of the Praetorians are eventually invited to join the Political Class. Prior to that occurring, they are vetted for suitability, after which they become “made men.” Consider the long list of senior military officers and police chiefs that joined the ranks of the political elite. It is a sight to behold, their new-found support of the Political Class, a class they had silently held in contempt until their recent assumption. Metropolitan police chiefs, district attorneys and joint chiefs of staff are selected for political compatibility, not conviction of character.

How Does It Play Out?

History does not keep a flattering record of societies that allowed the Praetorian Class to rise. The Roman Empire’s decline from splendor to squalor extended for two centuries whereas the Nazi Third Reich collapsed in less than two decades. The continuous drain on productive resources, continuous warfare against new foes, abrogation of human rights and liberties and a pervasive culture of fear inevitably send the society into a tail spin. Some societies are able to observe the retreat of the Praetorian Class, but it is usually a function of economic necessity and often after a great price has been paid by the general population.

Unfortunately, as the tragedy unfolds, the Economic Class often tries to ride out the calamity. This is understandable, since people have a limited capacity to internalize long-term trends. In fact, because people adjust to new circumstances relatively quickly, it is almost impossible for them to compare the condition of life in the present versus the past. The common vernacular for this concept is “the new normal”, which upon the slightest reflection represents an obvious paradox, since the word normal implies a historically stable trend.

The Third Reich as a Textbook Example

History books are filled with examples of societies that have seen the rise of the Praetorian Class, followed by their own subsequent collapse, ranging from the Roman Empire to the Soviet Union. Of all the examples, however, none seems more instructive than the rise and fall of the Nazi Third Reich in Germany.

Over a period of two decades, starting with the collapse of the Weimar Republic and the end of World War II, Germany saw the rise of a charismatic demagogue, the rise of police and paramilitary forces, the development of a military-industrial complex, the assumption of industry by the State, the demonization and persecution of scapegoats finally resulting in widespread warfare and societal ruin. Because the timeline is relatively compressed compared to other historical examples, spanning a single generation, the Third Reich serves as an excellent example of the broader consequences a society experiences when we observe the rise of the Praetorian Class. Furthermore, by virtue of its recent occurrence, many cultural and technological parallels serve as clear milestones.

Call to Action for the Economic Class

In order to evade the inexorable path to ruin, two critical actions must be taken. First, it is imperative to understand historically how events play out, identifying key milestones along the process. Some milestones may include the level of military spending, such as the $700 billion that the United States spends annually on defense. Consider the escalating threat propaganda. Leading up to the war with Iraq in 2003, a common justification heard was “We gotta fight them there, so we don’t have to fight them here.” Apparently that strategy didn’t work, since the 2012 National Defense Authorization Act declared the United States part of the global battlefield. Is it the increasing monitoring and control exerted over the media, including the subpoena and detention of free-speech activists? Or perhaps it is the tortuous argument that the private minting of silver coins bearing no resemblance to US legal tender currency represents domestic terrorism.  

As the saying goes, “History does not repeat, but it does rhyme”, which is to say there are events that have played out universally in the past and are likely to do so again. An implied task that emerges is the need to be an avid student of history. Usurpations of power observed today have historical precedents in some form or another and therefore serve in some instances as predictable milestones.

Second, identify the milestone that defines the “point of no return,” at which point taking no action is likely to have very adverse consequences. This is a very difficult task emotionally as it usually requires taking drastic action before circumstances clearly warrant it. It may involve winding down business and social commitments while conditions on the surface still seem fine. This, of course, represents a personal balancing act. While there is merit in the saying that it is better to be a month early than a minute late, there is a practical limit to the value of that axiom. Predicting a financial collapse twenty years early, and making adjustments accordingly, results in significant opportunities lost, both personally and professionally.

In Summary

The emergence and rise of the Praetorian Class is a common observation in societies that have transitioned from market-based meritocracies to societies governed by coercive syndicates formed by the Political Class. The Praetorian Class is formed and grown to defend the Political Class and in time becomes the dragon that rules its master. It represents a highly disturbing trend because it foretells the decline, not the advance, of a society. In some instances, the decline is peaceful, clearing the path for an improved future. Unfortunately, in many instances that is not the case. The Political Class leverages the full force of the Praetorian Class representing significant loss in wealth, personal freedom and, in many cases, human life. For this reason, it is critical that productive members of society take steps to protect themselves.

Pete Kofod is the founder and president of Datasages (www.datasages.com), a technology services firm that offers cloud computing and strategic technology services to various private organizations. Before entering the technology sector, Pete served with the US Military, both in the United States and abroad, where he forged many close friendships that still thrive today.

 Pete is a property owner at La Estancia de Cafayate in Argentina and enjoys a variety of outdoor activities including tennis, skydiving and hiking. His most recent adventure is pursuing his private pilot's license. Pete is married and homeschools his two children.

Pete can be reached at 
contact@datasages.com.

[The best way to protect yourself in these troubling times is to internationalize your assets (and maybe yourself). This free report reveals five strategies to help you do just that...]


Friday Funnies


The whole idea of the Friday Funnies came to me as a result of enjoying what has now become one of the most popular, indeed endemic, uses of e-mail – the sending around of jokes. Though many jokes are decidedly not appropriate in polite company, and I actually am quite hesitant about opening e-mails with subject lines suggesting they contain jokes out of concern that they may also contain a virus, there are certain individuals whom I can usually trust to only forward me gems. Doug Casey being one of them.

Though just a tad on the politically incorrect side, he shared the following collection of zingers on the different ways that people are capable of looking at things.

Two guys were discussing popular family trends on sex, marriage and family values. 

Bill said, "I didn't sleep with my wife before we got married; did you?" 

Larry replied, "I'm not sure, what was her maiden name?"

A little boy went up to his father and asked: "Dad, where did my intelligence come from?"

The father replied, "Well, son, you must have gotten it from your mother, because I still have mine."

"Mr. Clark, I have reviewed this case very carefully," the Divorce Court judge said, "and I've decided to give your wife $775 a week."

"That's very fair, your honor," the husband said. "And every now and then, I'll try to send her a few bucks myself."

A doctor examining a woman who had been rushed to the Emergency Room took the husband aside and said, "I don't like the looks of your wife at all."

"Me neither, Doc," said the husband. "But she's a great cook and really good with the kids."

A blonde calls Delta Airlines and asks, "Can you tell me how long it'll take to fly from San Francisco to New York City?"

The agent replies, "Just a minute."

"Thank you," the blonde says and hangs up.


Miscellaneous

  • Bud Conrad on Financial Sense Newshour. Immediately following the Herculean effort of preparing his 2012 forecast for the US economy and major global investment markets for the just-released edition of The Casey Report, Bud Conrad, chief economist of the Casey circus, sat down for a comprehensive interview with Jim Puplava, host of the always excellent Financial Sense Newshour.
  • Space Is Going Quickly for the Upcoming Harvest Celebration. You’ll want to act fast if you are going to secure a spot at one of the two Harvest Celebration events at La Estancia de Cafayate, Argentina. The dates of the events are: March 6 – 11 and March 12 – 17. It is actually impossible to communicate what a fantastic escape from the ordinary these events are. But space at each of the two events is very limited (30 people at each), and interest is running high, so if you are interested in attending and seeing for yourself what’s going on in “Casey’s Gulch,” you’ll need to act promptly. For an event guide and more info, drop Dave Norden an email at dnorden@LaEst.com today.
     
  • Casey’s NexTen Honoree Amir Adnani on CNBC. Given Doug Casey’s prescient (and hugely profitable) call to buy uranium stocks when the “other yellow metal” was selling for just a few dollars a pound, a number of longer-term readers are familiar with the sector that, post-Fukushima, has again regained pariah status. But can the world really turn its back on nuclear power? Is uranium a good contrarian play? Casey NexTen honoree Amir Adnani, CEO of Uranium Energy Corp. (UEC), just did an interview with CNBC on those and other topics, including the trend in the uranium price. While Amir obviously has a vested interest in talking up nuclear, he is a solid guy who knows his business and makes his case eloquently. Worth a watch.
  • Casey’s Club Closes at Midnight Tonight. The narrow annual window for new members to join Casey’s Club closes at midnight tonight. Members enjoy lifetime access to all of Casey Research’s paid services, including our very exclusive premium alert services, for a one-time inauguration fee and a small annual maintenance fee. If you are an active investor with a significant portfolio, this is by far our most comprehensive service at the very best value. Details here.

And that's it for today. Until next week, thank you for reading and for subscribing to a Casey Research service.

David Galland
Managing Director
Casey Research

Jan 13, 2012