Revolt Against the Elites, Part II: How the Rebellion Will Affect Your Pocketbook

By P.J. O'Rourke

Last week, I wrote about how we are in the midst of a worldwide rebellion against political, intellectual, and financial "elites."

Donald Trump is one example. Britain's exit from the European Union (the so-called "Brexit") is another. Support for Bernie Sanders, skepticism about transnational and international organizations of every kind, volatile markets, shaky currencies, and various political deadlocks and meltdowns in developed and developing countries alike all point to a loss of confidence in the "establishment" – the elites who've been running everything everywhere since the end of World War II.

When the world is losing confidence in its leaders, where can an investor be confident about putting his money?

The short answer is, "Hide it!" Seek a safe place to store value. I won't go into detail because Stansberry Research has been doing that for you.

Porter and his associates have all sorts of wise technical advice about the strategies and tactics of finding and using methods to store value. That's not my department. I'm just a political analyst running around with my head in my hands shouting, "Bury the bullion under the swing set and stock up on ammo!"

But the longer answer is to be aware of trends that will result from distrust of leaders and instability in leadership. We can spot a few of these trends...

Weak/Strong Governments

A global rebellion against elite "insider" leadership results in weaker leaders. Our own election is an example. We have an "outsider" candidate, Trump, who's a vague and unpredictable loudmouth. And we have a second-rate elite "insider," Hillary Clinton, who has been so damaged by attacks from another "outsider" (Bernie) that no one likes her. (Actually, no one ever liked her. The fact that she has become even more dislikable is almost amazing. How did she do it?)

One of them is going to get elected, and half the country is going to hate him or her. We'll have a weak leader. But paradoxically, that won't mean a weak government. Weak leaders overcompensate by abusing government power to show that they aren't weak. Best case: Barack Obama. Worst case: Bashar al-Assad.

Look for Hillary or Trump to take the little tack hammer of executive privilege that the Constitution provides and turn it into a 100-ton pile driver.

With Hillary, we'll get the same kind of executive actions and presidential orders we've gotten from Obama. These will continue to expand the executive branch's control over regulatory action, foreign policy, and social issues, which are supposed to be the responsibility of the legislative and judicial branches of government.

Except it will be worse with Hillary. She's more of a bully and a busybody than Obama, and she has more "ideas." Letting her write the regulations will be like letting wrestling promoter Vince McMahon script the high school football game. "The left tackle hits the quarterback with a chair!"

It's harder to say what Trump will do. But he's the epitome of "executive privilege" if ever there was one. Expect him to meddle "bigly" in immigration, trade, and international treaty commitments.

Likewise, around the world, weak leaders will be making themselves into strong pains in the neck. Government decisions will be less predictable, increasingly arbitrary, and more quickly reversed.

This will be no time to use common sense. When weak people are making decisions, don't ask, "Is this the right thing to do?" or "Is this the smart thing to do?" Ask, "Is this the thing to do to make weak people look strong?"

More Funny Money

It's obvious that smoking-hot printing presses spewing out national currencies and central banks charging negligible or negative interest rates are having disastrous effects. Expect the disaster to continue... and to accelerate.

Weak leaders have a weak hold on their constituents. The easiest way to strengthen that hold is to promise more entitlements and economic "stimulus" paid for with soon-to-crash cash.

The public is being treated like children bribed with candy. Leaders are hoping it won't be until the kids get home and unwrap their lollipops that they'll discover... "Hey, this thing is made of lard!"

Immigration Hell

One of the principal causes of the Revolt Against the Elites is the chaos of mass immigration. Some of the immigration is caused by war, terror, and gross misrule. Some is caused by economic privation. The causes really can't be separated. War, terror, and misrule are the prime movers of modern economic privation. Elites are refusing to address the cause of immigration. And anti-elites are refusing to accept the chaos.

The result is across-the-board crackdowns on immigration. Immigrants are simply being dumped into refugee camps, squatter shantytowns, and – if they've managed to make it across a border – urban slums.

This is a very big – and very sad – humanitarian problem.

But besides being a humanitarian problem, it's an economic mistake. The United Nations estimates there are 50 million refugees worldwide. Think of the enormous human capital represented by those 50 million people. All of it is being wasted. Even more so because these are the people with the intelligence, courage, and drive to get out of the hellish places they were in and try to find a better life for themselves and their families.

If they had safe places to go back to, they could be making those places prosperous and hence increase the prosperity of everyone in the world. Instead, they're stuck in a no man's land of utter non-productivity.

An expensive non-productivity. If we assume it takes just $0.50 per day to feed and shelter refugees, leaving them in camps costs the taxpayers of various developed countries more than $9 billion a year.

And the fact is, developed countries need immigration. The populations of developed countries are aging, their workforces are shrinking, and their numbers of old and ill dependents on entitlement programs are growing. Immigration is what has kept the United States from suffering the severe demographic problems facing Japan, western Europe, and other places with slow- or no-growth populations.

Of course, this immigration has to be well-organized, selective, and systematic to guarantee the integration of immigrants into our societies. Anger about mass immigration isn't likely to lead to that kind of system.

As it is, by failing to make use of the human capital of 50 million refugees, we're acting like people who want a house and find a truckload of two-by-fours, a barrel of nails, bundles of shingles, and bags of cement in our empty lot and say, "What's this junk?"

Continued Slowing of Economic Growth

In theory, an anti-elite movement should result in diminished government, and therefore increased private enterprise. But the reverse is more probable.

Frustration with elites about immigration is one example of how frustration can lead to non-productivity.

Another principal cause of the Revolt Against the Elites is globalization.

Just because elites have mishandled globalization by neglecting the problems it causes for ordinary people doesn't mean we don't need globalization. The elites have mishandled energy, too – kowtowing to OPEC... plowing millions into clean-energy scams like Solyndra... refusing to build the Keystone pipeline... encouraging the use of natural gas and then banning fracking. This doesn't mean we don't want the chandelier to go on when we flip the light switch in our dining room.

Any time we get in the way of the free flow of goods and services, we're being about as useful to the economy as someone who parks his tractor-trailer sideways across three lanes is being useful to I-95.

When somebody as far out on the end of the political teeter-totter as Bernie agrees with somebody as far out on the other end as Trump, that's a sure sign they're both wrong. And free trade is what they're wrong about.

We're facing a future that combines arbitrary government, bad monetary and fiscal policy, poor use of human capital, and a determination to limit or reduce the size of free markets.

Is There Any Good News?

Yes. Given what a mess the world is shaping up to be, the defense industry could be a sensible investment.

Regards,

P.J. O'Rourke