Marc Andreessen: Systemizing the Great Enrichment

In the last 200 years, according to economist Deirdre McCloskey, mankind has experienced a Great Enrichment, a real increase in per-capita income of about 30 times, from $1 to $3 per day to over $100 per day. There has never been anything like it.

How did it happen? In my telling, it came from "anybodies" inventing and implementing new technologies that changed the world, starting with machine textiles. Then it was "anybodies" inventing steam pumps to pump out mines, then steam locomotives and steamships that carried people and goods all over the world. Then illuminating oil for oil lamps, then personal gasoline-powered transportation, then airplanes, then electricity for illumination and transportation, then radio and TV to beam news and entertainment to the masses, then computers, then the internet, then social media.

It all happened despite everything, because of "anybodies" getting an idea and running with it. But now, with the mainstreaming of venture capitalists, we have people like Marc Andreessen actually out there looking for people to be the next economic revolution.

Marc Andreessen, you will remember, was the guy that made Netscape into the web browser that changed the world. But now he and Peter Thiel -- of PayPal -- are out looking for the guy that will invent the next Netscape. And they think they know the kind of person they are looking for. Here's how he describes it in an interview with Richard Hanania.

We’re funding the new things, the new technologies; we basically make bets on very fringe ideas, many of which don’t work. We work typically with very idiosyncratic, strongly willed iconoclastic entrepreneurs who are not necessarily the kinds of people who you’d want running a big bank, but are the right people to build a new technology company.

Andreesson talks about the crisis in the science research game and the reproducibility crisis in research. But then there are the guys that just can't take the bullshit any more.

But now if you’re really sharp and young and hungry and aggressive and ambitious, you look around you and… I hear this all the time, from our founders I hear “I looked around, what I saw was incredibly depressing, and I realized I had to get out of there. I had to get into a position where I could do my own thing because I want to be part of a high-performance environment that doesn’t tolerate all this bullshit.” 

He talks for a while about "regulatory capture" and how established corporations naturally sew up the market. Call it the death star. What to do?

We run a continuous flow of X-wing fighters up against the death star. It’s all of our startups. We’re just constantly funding these very fired-up entrepreneurs with these very disruptive ideas, and I’ll discuss disruption in a second because it’s very critical here and the theory of disruption is often mischaracterized.

Then we get down to the nuts and bolts of Thiel fellowships, where Peter Thiel pays kids not to go to university.

The Thiel fellowship is super interesting. I’m super open on these things, and even I was like “really? 19-year-olds?” Basically he paid a bunch of 19-year-olds to drop out of college, they all moved to a group house in San Francisco, and he told them all “go nuts.”...

But you look at that cohort of kids, they’ve been successful beyond belief! Ethereum! Ethereum is a $300 billion outcome in ten years; a Thiel Fellow. Sigma, another company we’re invested in is extraordinarily successful… they’re revolutionizing computer design; Thiel Fellow. And there’s another dozen of these that are like these really spectacular breakthrough…

Actually, if you think about this it is really scary. It was one thing when "anybodies" were inventing machine textiles and steam engines. But when chaps like Andreesson and Thiel are deliberately seeking out market disrupters, and funding them, and letting the chips fall where they may...

Really, we have no idea what will be the net result of this. It could be the proverbial step too far. Or it could be the best thing since sliced bread.

Meanwhile Dave, my neighbor across the street, with Helion Energy, a fusion power startup, is building a plant in Everett, Washington, in the next stage in its attempt to create useful fusion power.

According to company officials, by applying proven and patented technologies, Helion is working towards building the world’s first commercially-viable fusion power plant which runs on a fuel that can be derived from water.

Really though, I'd prefer my own little fusion plant in the back yard. So I didn't have to rely on the grid.

Odd, isn't it. Here we have the Marc Andreessens and the Peter Thiels of the world basically drilling holes in the economy and blasting away with dynamite. While the Joe Bidens and Mark Milleys and Dr. Faucis are running the ship of state on the rocks. 

If you aren't scared stiff you don't understand what is going on.

Idle Prognostications About the Next Regime

One thing about everything going wrong on Joey's watch is that it delegitimizes the whole regime and its sacred narratives, including:

Over/Under Political Formula. When the whole nation is getting whammed by big-time inflation, does it matter if you are black, white, or whatever?

Save the Planet. I get that every ruling class has to save us all from existential peril. But let's just wait until a real peril shows up. Humans aren't that good at predictin' and prophesyin' but we are real good at adapting when the chips are down.

World Hegemon. If you are not prepared to be a real Hegemon, what's the point of fiddling around in the Middle East -- or Europe for that matter? 

Politics as Royal Road to Justice. Politics is division and government is war plus loot and plunder. I'd call that the very definition of injustice, but your mileage may vary.

Entitlement State. If we all saved for our own old age that would save about $1.5 trillion in government pension spending, $1.7 trillion in government health care spending. If we sent our kids to the neighborhood micro school, we could save $1.2 trillion in government education spending. Numbers for 2019.

The thing is that it is impossible to change any of these elements in the current ruling class political formula. Because nobody agrees to give up their share of the loot and plunder until after the Taliban takes over and they are just trying to stay alive.

It is only at the point of regime change that the government can do anything serious. But, just in case we have regime change somebody has to think about what it would look like.

Middle Über Alles Political Formula. The new regime will exalt the ordinary All-American middle-class patriot over fashionable and conceited wokey elites and their neo-serf Little Darling vote-banks.

Death to Pirates. The new regime will feature a world-class pirate-hunting navy. Its purpose will be to make sure that no pirate ever tries to take over a merchant ship engaged in honest commerce.

Market Über Alles Economy. There will be no economic regulation and departure from the voluntary market system. Because all compulsion and regulation means a reduction in overall prosperity. The market means that each of us figures out something useful to do and offers that service on the open market. 

Education with Moms and Dads. No more government education. Instead early education will be run by moms at home schools and micro schools, and normal education through high school will be combined with Jobs for Kids. Yeah. Children will have jobs -- working for pay instead of for nothing at government child-custodial facilities -- and their employers will teach them the Three Rs and whatever else takes their fancy. Dads will be in charge of sports, hiking, hunting and fishing.

Saving for a Rainy Day. No more entitlements. Every worker will save for their own retirement -- and sickness, and end-of-life health care, and unemployment and starting their own business. People that fail to save will be forced to save by deductions from their paychecks.

Everybody Helps the Poor. Instead of shuffling the relief of the poor onto gubmint bureaucrats every American will be involved, from billionaires to teenage kids. Meanwhile, of course we will encourage the rebirth of fraternal organizations and mutual-aid societies that were once the glory of America.

The New Separation of Church and State. The new regime will enforce a separation of church and state, and by church will mean every organization or movement that advertises a moral narrative about the meaning of "life, the universe, and everything."

You can see, of course, that this is pie-in-the-sky, because it abandons the eternal rule of politics and government, that it is a war for the survival of Our Community, and loot and plunder will be distributed after the glorious victory.

But I think that we are already in a new era where loot and plunder doesn't help anyone, not even the victors. And I think that the desperate all-out program of the Biden administration to go flat out on handouts to its supporters, to go flat out on systemic racism, and flat out on climate change is actually a sign that, in Kansas City, they've gone about as fur as they can go.

Hanson: Are We in a Revolution?

Today at American Greatness Victor Davis Hanson asks: "Are We in a Revolution and Don't Even Know It?"

Let me answer this: Yes, of course we are. The question is: where are we in the revolutionary cycle?

If you are a devotee of Crane Brinton's Anatomy of Revolution then the question is where are we in the revolutionary cycle? Brinton's stages are:

The Fall of the Old Regime where a regime is discredited and running out of money.

The Rule of the Moderates and Dual Power where moderates are trying to rule but are in conflict with extremists that operate a parallel government.

Reign of Terror and Virtue with extremists purging the world of injustice and sin and vice.

Thermidor with a falling away into normal life, usually featuring a dictator, nationalism, and foreign conquest.

Now Brinton's book featured four revolutions: the English Puritan Revolution, the American, French, and Russian Revolutions.

I'd say we are in something different. But not completely different.

The big difference today, I would say, is that, while Brinton's four revolutions were all about the new middle class -- led by intellectuals -- taking power from a feudal or almost feudal ruling class, we have a different situation.

That's because our ruling class is the middle class led by intellectuals that took power variously in the last three centuries. And if you ask me all the phases identified by Brinton are happening all at once. We have a discredited old regime that looks to be running out of money; we have ostensible moderates like Biden in office but we have a parallel government of activists and "lawfare" operating in parallel and partly with the consent of the ruling class; we have the reign of "woke" terror busily canceling people on social media and purging any backsliders from positions in corporations, education, and media. And we have Donald Trump that our ruling class experiences as a nationalist dictator looking for trouble with China: literally Hitler.

So, our times are different, and the exact framework of revolution will work differently this time.

Now, I would say that it was only in the Bolshevik Revolution that the modern "political formula" was practiced, as invented by Marx. That is, the Bolshevik Revolution was self-consciously an over/under revolution of the educated class allied with the lower class against the middle class, the "bourgeoisie."

Since then all modern ruling classes have operated on this principle. In the US we have an educated class that experiences itself as Allies of Oppressed Peoples fighting against White Oppressors. But I understand its "political formula" as the ruling class using real and imagined victims as cats paws to scratch and mutilate the ordinary middle class: to make the ordinary middle class the "other."

The question is: will the ordinary middle class find the cojones to fight back against the educated ruling class? And can it find a way to do this without a full-scale civil war with the attendant butcher's bill?

Now I say that if you look at US politics over the last half century you see the ordinary middle class being formed into a head of resistance against the educated ruling class again and again. Richard Nixon was elected by a middle class frightened by the Sixties Kids. Reagan was elected by the middle class reacting against the elite incompetence of the Carter "stagflation." The election of Obama was followed immediately by the organic self-organizing Tea Party that the Obama boys harassed with the IRS. And with Trump we had an open populist nationalist running a campaign for the votes of the ordinary middle class.

Obviously this recurring movement of ordinary middle-class Americans could be thrashed and dispersed by our current ruling class, with prejudice, if it got its act together. Or the movement could grow into a nationwide organic movement that would prove to be unstoppable by any ruling class that hesitated to use full Stalinist methods on its opposition.

And if you ask me, anything could happen. On the one hand we have the utter incompetence of the educated ruling class indicated by its failures in foreign policy and economic policy, and its mindless response to the COVID crisis. On the other hand you have the disciplined street thugs of BLM and AntiFa and the whole culture of left-wing activism that controls the conventional wisdom on every issue from race to climate change.

What will happen? Nobody knows. We don't know what happens when the educated ruling class and the ordinary middle class meet in political battle.

In other words, we are making history here. I think that there is a saying that you don't want to be there when history is being made. But I could be wrong.

Economics and Politics: The Biden Trainwreck

One of the problems with economics, in my opinion, is that politicians use it as a way of sailing too close to the wind.

Obviously, politics is all about using the wealth and production capability of a nation to wage war and to reward its supporters. Economics, starting with the classical economists, showed that making war and handing out freebies to the supporters doth not a prosperous nation make.

Before classical economics, it was easier for politicians to do what comes naturally: to wage war and loot and plunder. As long as you were the victor and you were doing the looting and plundering, what was not to like?

And hey, it all made a rough kind of sense. If wealth and prosperity were all based upon food-growing land, then it stood to reason that to expand the nation's food-growing land was beneficial. In Mein Kampf Adolf Hitler made the argument that of course Germany needed to grow its own food.

Today, however, food-growing land and prosperity do not go together. The Canadians have tons of food-growing land in the western prairies, and the ships queue up in Vancouver harbor to load up grain and take it to Asia. But who cares? What matters is excelling at value-adding activities from extraction, manufacturing, and the whole world of the modern economy of computers and the internet.

But politicians are still in the business of conquest -- usually in elections -- and distribution of loot and plunder to their supporters. So today, economics has become the technology of how much loot and plunder the economy can stand before it collapses in inflation. That is the point of macroeconomics, in particular Keynesian economics and the new MMT (modern monetary theory). The whole point of Keynesian economics was to give politicians an excuse to run deficits in the wake of a recession like the Great Depression. The whole point of MMT is to give politicians an excuse to continue spending and electing to the max. Because if the debt is in your own currency, who cares?

And there is a tendency in political circles to push things just a little further, because, if the current level of taxation and spending and regulation hasn't killed the economy, what damage could just a little more do?

Well, I think we are in the middle of a nation-wide test of going as far as it can go. Because when you crank up unemployment benefits into the stratosphere, and suspend rent payments for the renters, and suspend mortgage payments for the borrowers, and suspend student debt payments for the university graduates, what happens next?

Also, there is the little problem, which goes beyond economics, that government cannot withdraw a previous award of loot and plunder without incurring the rage of the recipients and the withdrawal of grateful political support.

For instance, if I were a Democrat right now it sure would be nice if the government were not spending $1 trillion a year on mostly white Boomer Social Security and $600 billion on mostly white Boomer Medicare. Talk about systemic racism! But, of course, nobody can ever reduce those entitlements and give them to deserving non-white post-Boomer voters. It would be electoral suicide.

But right now, someone has to take the bull by the horns and terminate the cool unemployment benefits and terminate the rent moratorium and deal with the mostly peaceful protests that will be ginned up by the activist left in opposition. Because we cannot continue with those loot-and-plunder giveaways without continuing to destroy the economy in a storm of inflation.

This is not rocket science. But it does go against the natural instinct of a politician, which is to give out tons of loot and plunder but never, oh never, to take it away.

And it does go against the experience of every Democratic politician in the land. For a Democratic politician loot and plunder has worked every time it has been tried. There are no wise heads telling today's politicians to Remember the Seventies. Or telling them to Remember Obama's Jobless Recovery. Why not, Nancy Pelosi? You were there in the Seventies. You observed how the Reagan revolution wrecked the 50-year-old Democrat hegemony. What happened to Leadership, Nancy Pelosi?

If you ask me it is an Act of God that Democrats are in charge of the post-COVID economy, and that the voters will blame Democrats for whatever goes wrong on their watch. It is Democrats that have to end the rent moratorium, Democrats that have to end the unemployment bonuses. And Democrats that have to take the heat. And it will serve them right.

And, Democrats, the sooner you do it, the better. Because the longer these freebies go on, the more that the recipients will cry bloody murder when you end them, the more that lefty mostly peaceful protesters will riot in the streets, and the more that the economy will spin into inflationary chaos in the meantime.

Imagine if Trump were president in charge of ending the freebies! Oh, the Horror!

Instead the Democrats are going to experience the Perfect Storm consequent on their whole philosophy of looting and plundering the economy to reward their supporters.

See, Democrats. Economics is not supposed to be a how-to on how for you can go to plunder the economy without wrecking it. It is supposed to show that politics is a wealth-subtraction business, always and everywhere, and the less of it, the better.

Making Things Worse: Civil Rights and the Sexual Revolution

Aside from the basic governmental function of defending the people from enemies, foreign and domestic, most government action actually Makes Things Worse. This is particularly true of our modern progressive educated ruling class, whose religion is that politics can bend the arc of history towards justice.

We have already seen how government education and pensions and government healthcare and home mortgages have Made Things Worse. Let us continue.

Government Civil Rights. When the United States Senate debated the Civil Rights Act of 1964, Sen. Barry Goldwater (R-AZ) spoke out against it. He argued that the Civil Rights Act should only ban discrimination by government. It should not ban discrimination by corporations and individuals. Thus he said on the floor of the Senate that the act

would embark the Federal Government on a regulatory course of action with regard to private enterprise in the area of so‐called “public accommodations” and in the area of employment — to be more specific, Titles II and VII of the bill.

This act branded Goldwater -- who had demanded the desegregation of the Senate cafeteria on behalf of his black aide -- a racist to the end of his days.

But imagine if the Civil Rights Act had confined itself to discrimination by government. Then we wouldn't have the current regime of government forcing private institutions to discriminate on the basis of the latest fashion in elite circles.

The necessity of Jim Crow laws in the South was that outfits like bus companies, railroads, and ordinary lunch counters, needed to be forced to discriminate against blacks. Because the logic of the market economy and private enterprise is that a customer is a customer. What matter is whether the customer is trustworthy, whether the customer pays his or her bills. 

But the natural instinct of government is to discriminate, because that is the nature of politics: for US and against Them. Political leadership is all about rallying the tribe or the nation to arms in the present emergency against the existential peril. So, what is needed is not legislation to supervise individuals and corporations; what is needed is legislation to supervise politicians and bureaucrats, to forbid them from following their natural political instincts and discriminate in favor of "our people" against "their people."

Is discrimination against other people by race or by sex or by national origin by private individuals and corporations wrong? Probably. But not illegal. Humans have ways of socializing people away from wrong that falls short of government force. It is call naming and shaming, and women are particularly good at it.

The conclusion is obvious. Government laws that forbid discrimination by private individuals and corporations is wrong and Makes Things Worse.

Government Sexual Revolution. Back in the day, fathers made sure their daughters were safe from guys unless "their intentions were honorable." Back in the day, divorce was unthinkable. Back in the day, abortion was monstrous. Back in the day, nobody got married unless their marriage was primed with a dowry or a bride price that basically provided the wherewithal to survive. What happened?

In part, of course, our increased prosperity and our increased medical knowledge has transformed the world. An abandoned mother can, sort of, raise her child. A girl pursued and abandoned by a faithless lover can get an abortion. Divorce isn't the end of the world, especially when women work in the market economy.

If we say that the meaning of life, the universe, and everything is for humans to produce the next generation and leave a better world for their children, then it makes sense to restrain young men that just want to get laid; it makes sense to force men to support and father their children; it makes sense to pressure married couples to stay married and not imagine that they could solve their problems with a new spouse.

Back in the day, the old rules were a matter of life and death. Today, not so much. Still, if you want a successful life and you want to leave prosperous children and grandchildren behind you then you need, in the breach, to follow the old rules. Girls need to feel that their lover will stick around. Children need a mother and a father: their mother and their father. Women need to feel that they will not be traded in for a newer model. Men need to feel that their wife will not suddenly take up an opportunity for a bit of hypergamy.

But today, the fashionable elite advances all these notions. And they are Making Things Worse.

More to come.

Making Things Worse: Healthcare and Mortgages

Aside from the basic governmental function of defending the people from enemies, foreign and domestic, most government action actually Makes Things Worse. This is particularly true of our modern progressive educated ruling class, whose religion is that politics can bend the arc of history towards justice.

We have already seen how government education and pensions have Made Things Worse. Let us continue.

Government Healthcare. Back in the day, when everyone (about 75 percent of people) belonged to the Masons or the Elks or the Eagles, each lodge had a "lodge doctor." I had a cousin who was a Mason -- he was a contractor that helped build his local lodge -- and he thought that lodge doctors was the best thing since sliced bread. You see lodge doctors were usually kids just out of medical school, and their were cheap. And, if you follow the link above, you will find that lodge doctors helped the poor. And, of course, doctors typically would attend to the poor for free. Not that they liked it, and not that they spent a lot of time and energy on the poor. But then I'm not sure that today's doctors put too much energy into their Medicaid patients, either.

Anyway, without government healthcare the cheapskates could get healthcare from their lodge doctors, others could have health insurance plans with whatever deductibles they had in mind, and the fancy-pants set would go to the Mayo Clinic. And we could all decide, years in advance, how much heroic care we wanted at end-of-life. Medicare, you know, has developed all kinds of protocols to speed end-of-life care. That's why Sarah Palin got into so much trouble talking about "death panels." How Dare She!

Then, there is the huge regulatory burden of government regulations and credentialization on healthcare. When you regulate an industry what you get is "regulatory capture." That's science, developed by George Stigler.

The conclusion is obvious. Government healthcare makes healthcare worse, and it won't get better until we break up the unholy marriage between government and the healthcare industry.

Government Home Mortgages. Back in the day, before the Great Depression, people only got to borrow about 50 percent of a home's value, and they could only get a ten-year mortgage, which terminated in a balloon payment, at which point you paid off the rest of the loan or you refinanced at the going interest rate. That meant that houses were smaller, prices were lower. But then the government created a secondary market in mortgage loans with Fannie Mae, and then they let Fannie Mae issue government-backed bonds, and then they let people borrow up to 80 percent of a loan and take out 30-year fixed-rate mortgages, and then they said that you had to take into account a wife's income when determining creditworthiness. And then home prices soared into the stratosphere and priced the kids out of the market.

Plus, as the science says in Walter Bagehot's Lombard Street, when you have mortgages that can't be liquidated because low down payments and borrowers can't make their payments because unemployment then you get the mother of all credit crunches as in 2006-08. So low-down mortgages make the credit system fragile. Imagine.

The conclusion is obvious. Government mortgages make homes more expensive and the credit system more fragile.  They make home ownership worse.

More to come.

Making Things Worse: Introduction, Education and Pensions

One of the constants in political rule is that, while the job of political leaders is to defend their people from enemies foreign and domestic, the worst enemies of the people are the politicians themselves.

The reason is not hard to find. Political leaders -- chiefs, dukes, kings, emperors, presidents -- have funded their armies and police forces, mostly, from taxation and forcible exactions from the people they are sworn to protect. It is a small step to expand the exactions from the amount necessary to protect the people into an amount sufficient to build an empire or a personal fortune, and distribute loot among your supporters.

In other words, it is a small step from improving the life of the people to Making Things Worse.

More and more, I find that I want to tell the story of our times as the story of The Educated Ruling Class that Made Things Worse.

You can see why that narrative might be attractive to me. It negates the story that the educated ruling class wants to tell, of itself as the enlightened, progressive, liberal people destined by the arc of history to Make Things Better -- by using political power. And I like the kind of narrative that cuts across the ruling class narrative. It makes me feel good.

So let us review all the glorious accomplishments of our rulers, and turn them upside down, proving conclusively that they Make Things Worse.

Government Education. Back in the day, when Shakespeare went to school, children started work at age eight: child labor. But his dad, a glovemaker, could afford to send his kid to the local grammar school. Lucky Will. 

What a wonderful thing that we ended child labor so that every kid could get an education! Not.

For one thing, you may not have noticed, we still have child labor. Kids are expected to go to school all day, then do homework. That is work, in my understanding. And do you know how much children get paid for working in school all day and doing homework in the evening? I'll give you one guess.

But but but! How could kids get an education if they didn't go to a free government school? Are you serious? First, we could pass a law that the employers of all kids under the age of 16 had to provide classes in the Three Rs. Second, we could encourage all employers to formalize their relationship with their young employees in an apprenticeship contract. Did you know that in the old days of apprenticeships the employer would typically commit to providing education and training to the apprentices? Third, we could ennoble billionaires that created and funded schools for the Oppressed Peoples.

I could go on.

Instead, we have one-size-fits-all government child custodial facilities, and the teachers in these schools are clearly a very powerful special interest that politicians hardly dare challenge. In the late COVID incident, teachers clearly signaled that they were more interested in their own health than in teaching children. And it seems that all over the land, the government school districts and universities are all deciding with one voice to teach critical race theory. What's that all about? When did we get to vote on that?

The conclusion is obvious. Government education makes education worse, and it won't get better until we stop governments educating our children.

Government Pensions. One of the constants down the ages is that rulers get support by rewarding their supporters. Feudal lords reward their vassals with nice choice manors -- taken, no doubt, from a disobedient vassal. Warrior lords reward their soldiers with loot and plunder. Absolute monarchs reward their supporters with sinecures and noble titles. Modern politicians reward their voters with entitlements. Governments reward their employees with lifetime employment and rich, fat pensions.

So I suggest that government pensions are monies forcibly removed from the economy and given as a reward to the supporters of the ruling class. They are, and have always been, a net loss to the prosperity and the wealth of the people.

But but but! Whatabout the poor? Whatabout widows? OK. But let us start with ordinary people. First, if ordinary people save for their own retirement, it means that every dollar of their savings will go to create jobs for the young'uns rather than get sucked up in taxes that are spent on today's geezers. What a concept! Second, and this is important, people will retire when they can afford to, or when their financial advisor recommends. They may retire at the point that they can convert their savings into an annuity, or they may retire at the point where the income from their savings is sufficient to provide a suitable income without dipping into capital. Third, they can use their savings at any point in life, to start a business, to educate the kids, to tide over a government recession. Fourth, they will be able to transmit their savings onto their children.

OK, so whatabout the poor? Well, in my perfect world the poor will have jobs. And if you authoritarians insist, we will force the poor to save for retirement, assisted by billionaires, starting with the Widow Jobs, who will be forced to sell The Atlantic and do something useful with her money.

Whatabout widows? Did you know that one of the reasons why my dad and just about everyone else back in the day joined the Masons or the Elks or the Eagles or the IOOF, or any other fraternal organization, is that they took care of widows. What? You didn't know?

The conclusion is obvious. Government pensions make pensions worse, and it won't get better until we stop governments fleecing workers and taxpayers to give pensions to its supporters.

More to come.