“Now, if you believe a lot of popular history, with books written by people like Jared Diamond, you believe that the elevation of European societies was due to external factors like the environment, or the exploitation of other peoples.
“Now, if you believe a lot of popular history, with books written by people like Jared Diamond, you believe that the elevation of European societies was due to external factors like the environment, or the exploitation of other peoples. I don’t think this is true. The reason that Europe has dominated human affairs is that, unlike China, India, or the Ottomans, Europe had no central authority capable of stifling innovation.
“It was, to put it philosophically, Hayekian. It was in Europe that spontaneous order was able to emerge: there was no top-down design. Now there were plenty of Europeans who tried to create a top-down or Cartesian design. The papacy or post-Jacobean France are good examples.
“But Europe remained essentially Hayekian until the EU arrived. And I would argue that the EU replaces the Hayekian nature of European order and is a betrayal of Europe’s exceptionalism. It shoots Europe in the foot. Look at the EU’s attempts to order Europe by design.
“It’s got a currency, created by experts, that has led to nothing but poverty and debt. It has attempted to organise trade by design, creating a common market which is a permission- based system. Since 1992, Europe’s trade has grown much more slowly than the rest of the world.
“It creates uniform rules: a 35-hour working week, data rules, rules on GDPR. The belief that someone in Brussels knows what data can and cannot do in the future has created rules that have stifled innovation and experimentation. It’s killing Europe and its innovation. It’s a disaster.
“The irony is that the very moment that the European continent is becoming more Cartesian, the rest of the world is going Hayekian. Those of you who are American know that you went Hayekian in 1776. China started in the 1980s and is now largely an economically free state. India has gone Hayekian since the 1990s. The world is embracing spontaneous order.
“For generations, the mantra of our ruling elites in every European country was that European integration was key to the strength and success and prosperity of the continent. Absolute
twaddle. In fact, integration is the cause of Eurosclerosis.
“Since 2009, the output of China has grown by 139 per cent, of India by 96 per cent, even the US by a respectful 34 per cent. The output of the Eurozone since 2009? Down by two per cent. Not a single eurozone university is now in the top 20. This is a continent that virtually invented the concept of the university.
“Where are Europe’s Googles? Where are their Apples or Amazons? The idea that somehow Euro regulations are going to set the initiative for the digital world economy is absurd.
“What should Europe do about this? They need to overthrow their Cartesian elites and their deference to groups of experts who supposedly know how to organise their affairs.
“They need a system of free trade which gives Europeans the right to buy and sell what they like. They need a system of basic freedoms. You should have an absolute freedom on the European continent to work where you like: not freedom of movement, but the freedom to work.
“As for the rest of the European architecture and grand construction, I don’t think we need it.”
– Douglas Carswell, The EU is a betrayal of Europe’s exceptionalism.
The world was due to end in April 1843, at least according to William Miller. Born in Massachusetts in 1782, Miller served in the War of 1812 against the British and ultimately became a Baptist preacher. No doubt influenced by his wartime experiences, he became obsessed with death and the after-life. After the war he devoted 15 years of his life to study of the Bible. During this period a number of millennial movements sprang up – influenced perhaps by economic crises (such as the recession that followed the Panic of 1837) or the growing social tensions that would in time erupt in the Civil War.
Miller based his analysis on Daniel 8:14:
“Unto two thousand and three hundred days; then shall the sanctuary be cleansed.”
He then used a contentious “day-year principle,” by which a day in Biblical prophecy became reinterpreted as a calendar year. By this reckoning, and using the starting point as the decree to rebuild Jerusalem by Artaxerxes I of Persia in 457 BC, Miller concluded that the second coming would occur on or around 1843. In a letter to his brother, Miller predicted that Christ would come,
In the glory of God, in the clouds of Heaven, with all the saints and angels, change the bodies of all that are alive on Earth that are his, and both the living and the raised saints will be caught up to meet the Lord in the air.
As for those left behind, the outlook was not so benign. Miller forecast that the Earth would be
cleansed by fire, the elements will melt with fervent heat, the works of men will be destroyed, the bodies of the wicked will be burned to ashes.
The wicked – those who rejected the Gospel – would not only die, but their spirits would be banished from the Earth, “shut up in the pit”, and not allowed to return to Earth for a thousand years.
The arrival of an extremely bright comet in 1843 bolstered fears of an impending apocalypse. Although reluctant to identify a specific date for the Day of Judgment, Miller finally settled on April 23, 1843.
April 23, of course, came and went without incident.
Miller concluded that he had erred in using solar years instead of lunar years, and came up with a replacement date for the end of days, namely March 21, 1844. The Millerites, as they were now known, purchased an enormous tent capable of accommodating more than 2,000 people, and were said to have bought “ascension robes” in preparation for their heavenly journey.
When March 21 came and went without incident, the Millerites plumped for October 22, on the basis that it was also the date of Yom Kippur.
When October 22 came and went without incident, Miller and his associate Joshua Himes embraced a new cause, namely to raise money for Millerites who had given up everything including their jobs and possessions to prepare for the end times. Thus began a period known as “the Great Disappointment”. A more expansive list of delusional ‘end of days’ predictions is available here. Armageddon, it turns out, is incredibly popular. Roll on, one might say, the eschaton.
The theory of ‘cognitive dissonance’ was developed by the psychologist Leon Festinger in the mid-1950s, after observing the strange persistence of belief by members of a UFO doomsday cult as their prophecies repeatedly failed to be vindicated in real life. Festinger suggested that people need to maintain a consistency across their beliefs, attitudes and behaviours. Since simultaneously holding contradictory beliefs is problematic to good mental health, the mind either acquires or invents new beliefs, or modifies existing ones, in order to reduce the level of dissonance or conflict between these competing structures of thought. In short, faced with cognitive dissonance, many of us will adjust our stated beliefs or attitudes rather than admit that we might have been wrong. This might also account for some of the stranger behaviour displayed by the more extremist members of the Remainiac fringe, such as that of the vexatious litigator Jolyon Maugham, who spent Christmas a year ago boasting about having clubbed a fox to death with a baseball bat whilst wearing his wife’s kimono (Maugham that is, not the unfortunate fox). The Canadian liberal economist JK Galbraith expressed Festinger’s theory somewhat more prosaically:
“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.”
As the British philosopher John Gray eloquently observes in this audio essay for the BBC, “the belief that an end to history is imminent never really goes away”. Gray compares the antics of the likes of climate change pressure group Extinction Rebellion to those of previous Armageddonists such as the Millerites. And then, of course, there is the cult of Greta..
Which is not to say that we deny that the earth’s climate may be changing. But as the author Ian Hall puts it, the business of climate change – and it is, undoubtedly, a business – is ‘unsettled science’. First, there is a need to establish, beyond all reasonable doubt, that the climate of the earth is undergoing something different from any previous historic cycles of temperature change. We then need to establish, beyond all reasonable doubt, whether human activity is responsible for such change. We then need to establish whether any altered behaviour on the part of human beings can effect ‘positive’ change on this apparently otherwise irreversible climatic trend. (And yes, we acknowledge that any form of environmental pollution or degradation, in and of itself, is fundamentally a bad thing, and should be discouraged).
Happily, not everyone in finance is swallowing the greenwash unchallenged. The Financial Times reported last year that Warren Buffett wasn’t buying the environmental thesis. Or rather, that he was only buying it on the basis that he received production tax credits for doing so:
It was wrong, he said during an interview with the Financial Times, for companies to impose their views of “doing good” on society. What made them think they knew better? “It’s very hard to do. If you give me the 20 largest companies, I don’t know which of the 20 behaves the best, really. I’ve been a director of 20 publicly owned [companies] and I think it’s very hard to evaluate what they’re doing . . . it’s very, very hard. I like to eat candy. Is candy good for me or not? I don’t know.”
And even if Berkshire’s management did know what was right for the world, it would be wrong to invest on that basis because they were just the agents for the company’s shareholders. “This is the shareholders’ money,” he said. At Berkshire, charitable contributions are ruled out on principle. “Many corporate managers deplore governmental allocation of the taxpayer’s dollar, but embrace enthusiastically their own allocation of the shareholder’s dollar,” he noted wryly.)
There is more than a whiff of doomsday to financial markets at present – reflecting in large part the chaotic attempts of a newly engorged Big State to control the uncontrollable. Keynes famously and ominously warned during the Great Depression:
But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time.
Keynes’ metaphor, of course, is invalid. As the likes of Mises would earlier observe, the economy is not a machine that can be turned on and off at the arbitrary whim of state functionaries. The economy is us.
Whether global supply chains and our energy infrastructure are being deliberately or accidentally destroyed is now something of a moot point. The reality is that we are living through an object and historic lesson in the dangerous futility of bureaucracy in an imperfect economic system. The upshot is that we have been hurtled back to the 1970s, with all their attendant social distress and stagflationary angst. The pragmatic response to which, for investors, is to avoid debt instruments like the plague, and to concentrate on the ownership of unindebted, highly cash-generative productive businesses, run by principled shareholder-friendly entrepreneurs, and trading on extremely undemanding multiples. Other forms of inflation hedges – we particularly favour the monetary metals, gold and silver – will also help. It feels like our current monetary system, the untethered fiat model, has reached the end of its natural life; what might yet replace it could even be an improvement
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio -with no obligation at all:
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: firstname.lastname@example.org.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and specialist managed funds.
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