The Deep State... Deepened
Editor's note: The "Deep State" is more dangerous than ever.
Longtime Digest readers are familiar with the idea of the Deep State – a hidden but powerful force that Bonner & Partners founder Bill Bonner believes is destroying the country.
In today's Masters Series essay – originally published in the January issue of The Bill Bonner Letter – Bill explains why the Deep State makes people poorer and more vulnerable...
The Deep State... Deepened
By Bill Bonner, chairman, Bonner & Partners
Much of history could be described as a clash of myths.
The Great Plague... crop failures... tidal waves – these are real. They happen, no matter what we think. But wars, crusades, financial crises, and crashes are almost all driven by some form of popular myth. They exist because they marshal human energies in enterprises (often quixotic, foolhardy, or plain stupid) that otherwise wouldn't happen.
Some of these myths pay better than others. Some are more durable. Some are more profound.
Property rights, peaceful exchanges, and money (a myth, too... money only has value because we believe it does) – all were valuable. They contributed to the growth of market economies, which made it possible for Europe to bring almost the entire rest of the planet to heel.
Yuval Harari, author of Sapiens: A Brief History of Humankind, describes the change these innovations wrought:
For most of history the economy stayed much the same size. Yes, global production increased, but this was due mostly to demographic expansion and the settlement of new lands. Per capita production remained static. But all that changed in the modern age. In 1500, global production of goods and services was equal to about $250 billion; today it hovers around $60 trillion. More importantly, in 1500, annual per capita production averaged $550, while today every man, woman and child produces, on the average, $8,800 a year. What accounts for this stupendous growth?
Capitalism.
It's too bad Harari didn't spend more time trying to figure out what capitalism is and how it works. He falls into the usual trap, believing that capitalism is almost the same thing as greed.
He even makes the claim that the African slave trade of the 18th and 19th centuries was capitalism at work.
This error is very similar to the mistake made by atheists who believe that the Crusades were the consequence of Christianity. The people doing the killing may have called themselves Christians. And the Crusades may have been directed by the Vatican itself. But they were fundamentally at odds with real Christianity. You can't both love your neighbor and try to kill him.
Capitalism and Christianity are mutually reinforcing. It is no coincidence that they arose at about the same time... and in the same place. Christ taught the Golden Rule: Do unto others as you would have them do unto you. Capitalism took the rule and turned it to gold: Offer your neighbor goods and services... at a profit! Later, philosopher Adam Smith observed that not only did this selfish impulse – to improve one's lot in life – benefit the capitalist, it also benefited his customer and the whole of society.
I speak of Christianity only because I am familiar with it. Other religions may offer similar insights. The Jews, for example, have a rule almost identical to Christ's lesson from the Sermon on the Mount. Asked how he could explain the Torah while standing on one leg (that is, succinctly), Hillel replied: "If there's something you don't want your neighbor to do to you, don't do it to him... The rest is detail."
Capitalism's "win-win" exchanges made Europe's progress possible. It also made it possible for Europe to pull so far ahead of its neighbors that it was able to enslave them, steal their lands, and take over their countries.
Everybody may be greedy. Everybody wants to get the most (money, status, power) with the least investment of time and energy. But there are two ways to do it. There is what I'll call the capitalist, or civilized way – based on mutually beneficial trades, peaceful commerce, and free markets – and there is the other way – by politics, force, regulation, special privileges, and government.
Both are based on myths, in the sense that they are products of human imagination and evolution. No test can prove that one is right and the other is wrong. And they are never completely separate. And neither exists in a pure form.
Generally, government is always involved – protecting property or confiscating it, enforcing private contracts or undermining them, allowing markets or outlawing them. Often, capitalists and government insiders work together, as Smith noted, in a conspiracy against the public.
But capitalism and politics are fundamentally different things... and at odds with one another.
"Crony capitalism" is not capitalism at all. "Consensual politics" is, likewise, a fraud. Capitalism is based on persuasion; politics is based on force. The two are enemies as well as collaborators.
Civilized capitalism – with its property rights, its markets, and its money – has paid off big-time. In theory, and practice, over the long term, it provides greater benefits to a greater number of people than any sort of central planning or forced redistribution.
The Deep State – a complex amalgam of government and crony capitalism – gives its bounty, too. But it is a different type. It comes almost entirely from win-lose transactions.
Deep State operatives and clients win. But only to the extent that others give up money, power, and status. Also, instead of strengthening society, plunder... looting... bribery... robbery... special favors... resources allocated to war, destruction, assassination, regulation, politics... ultimately, these losses and inefficiencies weaken the host economy.
The Deep State makes most people poorer, less innovative, and more vulnerable to competition from freer, less encumbered groups.
Protection Racket
Security is the core service offered by the Deep State. It comes in many different forms – but all bought with someone else's money... and freedom.
We are protected from cigarettes and alcohol. We wear seat belts. We have building inspectors, food inspectors, luggage inspections, smoke detectors, fire alarms, and "see something, say something" warnings on the highway.
We are protected from unemployment... from retirement... from sickness (health insurance is now compulsory)... from drugs.
This extra security is generally well received by the public.
Businesses want protection from the business cycle.
Established companies want protection from entrepreneurs and capitalism.
Investors want protection from bear markets. Cronies want protection from competition.
Zombies want protection from failure.
Everybody wants protection from disease, from cold, from hunger, and presumably, from climate change.
Arguably, extremist Muslims want protection from the modern world.
And Americans now rate Muslim terrorists as another thing they want protection from.
Protecting America has become a major theme of the presidential race, even though the country faces no significant threats. Most likely, if U.S. forces withdrew from the Middle East, the threat to the homeland would evaporate completely.
But America is now an empire. And the Deep State is fundamentally a protection racket. Like the Mafia, it does not provide services directly. It organizes them, like a pimp organizes to get an underage girl to your hotel room. The pimp gets the money. The poor girl provides the service.
And like the Mafia, the Deep State offers protection that is hard to refuse; you pay whether you want it or not.
Regards,
Bill Bonner
Editor's note: It doesn't matter that Trump is in the White House because, according to Bill, the Deep State already controls just about every aspect of American life... from health care to education, from the food on our tables to the never-ending war on terror.
In his latest warning, Bill exposes how the cronies behind the Deep State have pushed the world to the brink of an irreversible disaster. Click here to learn how that disaster will unfold... and how it could change your life forever.