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Sociopathy Is Running the US – Part Two

By Doug Casey, Casey Research

I recently wrote an article that addresses the subject of sociopaths and how they insinuate themselves into society. Although the subject doesn’t speak directly to what stock you should buy or sell to increase your wealth, I think it’s critical to success in the markets. It goes a long way towards explaining what goes on in the heads of people like Bernie Madoff and therefore how you can avoid being hurt by them.

But there’s a lot more to the story. At this point, it seems as if society at large has been captured by Madoff clones. If that’s true, the consequences can’t be good. So what I want to do here is probe a little deeper into the realm of abnormal psychology and see how it relates to economics and where the world is heading.

If I’m correct in my assessment, it would imply that the prospects are dim for conventional investments – most stocks, bonds and real estate. Those things tend to do well when society is growing in prosperity. And prosperity is fostered by peace, low taxes, minimal regulation and a sound currency. It’s also fostered by a cultural atmosphere where sociopaths are precluded from positions of power and intellectual and moral ideas promoting free minds and free markets rule. Unfortunately, it seems that doesn’t describe the trend that the world at large and the US in particular are embarked upon.

In essence, we’re headed towards economic and financial bankruptcy. But that’s mostly because society has been largely intellectually and morally bankrupt for some time. I don’t believe a society can rise to real prosperity without a sound intellectual and moral foundation – that’s why the US was so uniquely prosperous for so long, because it had such a foundation. And it’s also why societies like Saudi Arabia will collapse as soon as the exogenous things that support them are pulled away. It’s why the USSR collapsed. It’s the reason why countries everywhere across time reach a peak (if they ever do), then stagnate and decline.

This isn’t a matter of academic contemplation, for the same reason that it doesn’t matter much if you’re in a first-class cabin when the ship it’s in is taking on water.

Economics and Evil

When I was a sophomore in college, I asked my father – a worldly wise man but one of few words – some cosmic question, as sophomores are famous for doing. His answer was, “It’s all a matter of economics.” Some months later I asked him another, similar question. His answer: “It’s all a matter of psychology.” They were unsatisfactory to me at the time, but those simple answers stuck in my mind. And I’ve since come to the conclusion that they comprehend most of what drives human action.

Let’s look at the “matter of economics” only briefly, because it’s covered at length elsewhere and because it’s not nearly as significant as the “matter of psychology.”

One definition of economics is: The study of who gets what, and how, in the material world. Unfortunately, it’s been distorted over the years into the study of who determines who gets what, and how, in the material world. In other words, economic power has gradually been transferred from producers to political allocators. This has had predictably bad results, including not only the bankruptcy of the US government but of large segments of US society.

But what’s happening today is much more serious than an economic bankruptcy; you can recover from financial woes by cultivating better habits. We’re talking about psychological and spiritual bankruptcy. The word psychology comes from psyche, which is Greek for soul. When you look at the word’s origin, it’s clear that psychology is about much more than mental peculiarities. It’s not just about what a person has or what he does. It’s about what he is. The real essence of a man, his soul, is revealed by his philosophy and his beliefs.

In any event, it’s rare that anyone goes bankrupt because of a single bad decision. It takes many missteps, and consistently bad decisions aren’t accidents. Consistently bad decisions are the product of a flawed moral philosophy. Moral philosophy guides you as to what is right or wrong. The prevailing moral philosophy has so degenerated that Americans think it’s OK to invade other countries that not only haven’t attacked it but can’t even credibly threaten to attack it. I’m not talking just about Afghanistan, Iraq or Libya – pitiful non-entities on the other side of the world. They were preceded by even weaker prey, closer to home, like Granada, Panama, Haiti and the Dominican Republic. Not only that, but they think coercion should be used to steal wealth from the people who produce it, and give it to those who’ve done absolutely nothing to deserve it.

It’s hard to pick an exact time America’s moral bankruptcy started; perhaps the draconian Alien and Sedition Acts of 1798 were the first real breach in the country’s ethical armor – but they were quickly repealed and subsequently served as an example of what not to do for many years. There were real moral problems that arose because of the Mexican War, the War between the States and the Indian Wars. There were early attempts to create a central bank, but they fortunately failed. But I believe the real change in direction came with the Spanish-American War, which resulted in the accretion of an overseas empire, particularly in the Philippines where 200,000 locals were killed. As Randolph Bourne said, “War is the health of the state.”

Then came the creation of both the Federal Reserve and the income tax in the very unlucky year of 1913, which made it possible to finance the country’s completely pointless entry into World War 1. From there, with the New Deal, World War 2, Korea, the Great Society, Vietnam and so on, the US has gradually descended into becoming a very aggressive welfare/warfare state. It now has an overt government policy of inflating the currency, which constitutes a fraud, and running up the national debt, which is a swindle because it will never be repaid.

America is not the first to start with moral failure and move on to economic failure. In all the examples history provides, economic bankruptcy and political tyranny are invariably preceded by moral bankruptcy. It’s bad enough that these things have happened. But it’s even worse that they’re celebrated and taught to students as triumphs. That guarantees that the trend will accelerate towards a real disaster. Most people accept what they’re taught in school uncritically.

The pattern is no secret to historians. Machiavelli noted in his Florentine Histories (1532): “It may be observed that provinces, among the vicissitudes to which they are accustomed, pass from order to confusion, and afterwards pass again into a state of order. The way of the world doesn’t allow things to continue on an even course; as soon as they arrive at their greatest perfection, they again start to decline. Likewise, having sunk to their utmost state of depression, unable to descend lower, they necessarily reascend. And so from good, they naturally decline to evil. Valor produces peace, and peace repose; repose, disorder; disorder, ruin. From ruin order again springs, and from order virtue, and from this glory, and good fortune.”

This isn’t the place to deconstruct Machiavelli, but he makes a couple of points that are worth pondering. Does “good … naturally decline to evil”? In politics (which is his subject) it does, because politics necessarily attracts evil people, and evil necessarily brings ruin. Then order reasserts itself, because people despise chaos. And from order virtue arises, and from that good fortune. Machiavelli is right. Virtue does bring good fortune, and evil brings ruin. I believe it would be clear to Machiavelli that in the US virtue is vanishing and evil is on the rise. And Machiavelli would predict that things aren’t going to get better at this point until they “sink to their utmost state of depression, unable to descend lower, they necessarily reascend.”

In general, he’s correct. But sometimes it takes quite a while for a society to reset. After the collapse of Rome, real civilization didn’t return to the West until the Italian Renaissance, which was when Machiavelli lived. Interestingly, culture in Italy started a rapid decline in the 1490s, and the peninsula became a backwater – a quaint theme park at best – for hundreds of years. You can argue Italy is still headed downhill today. Perhaps it simply has to do with the nature of entropy: all complex systems eventually wind down, no flame can burn forever. But that’s another subject. It would have been nice, though, to keep the flame of America burning for longer than turned out to be the case.

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