The Nutjobs Are In Power

Did you hear that Defense Industry Minister Christopher Pyne wants Australia to become a major arms exporter?

Apparently his plan is to build up the local industry. He wants us to compete with Britain, France and Germany selling weapons and other hardware to places like the Middle East.

This has to be, without doubt, one of the most pathetic things I have ever seen in this country.

Think of all the industries and technologies ripe for Australian investment that could benefit human health and life. Instead we get this.

Here’s a forecast if that goes ahead: the Australian government will ally with dictators and repressive regimes, inflate the currency and run up the national debt.

A sorry record over the 20th century

I can say that because both the UK and the US – the biggest arms exporter in the world – have done exactly that over the last 50 years.

It’s an extremely profitable business for private enterprise that can get the big deals. Pity we the taxpayers are left behind. We get left with the monstrous debts to pay off.

The US is a case in point…

Slightly less than one fifth of the US government budget goes to ‘defence’ spending.

Billions of this goes to contractors who lobby the US government to get in on the action.

One of those is Lockheed Martin. Here’s a monthly chart of the stock. It looks like business is good…

Lockheed Martin Share Price

Source: Optuma

If you can sleep at night with the implications, an ETF on defence firms like this one makes for a pretty reliable earner.

US debt ceiling hit (again)

The US right now has again hit their national debt ceiling – US$19.8 trillion – and are paying its bills with ‘extraordinary measures’ in the meantime.

The usual political wrangling has to go around before they raise it again. The War on Terror is said to have cost US$5 trillion as of October last year.

I doubt that’s helping the situation. But oh, what’s this? The US last month said another 4,000 troops were needed to go to Afghanistan.

What’s that about again?

I kind of forget. I’m confused, too. Should I be worried about the Taliban, ISIS, Iran, Syria, North Korea or Russia?

Apparently US$1 trillion is needed to pay for the 960,000 veterans on lifetime disability now. That’s only going up if current trends (i.e. more war) continue.

Of course, this is only possible because the staggering expense of it is put down for future generations to pay off.

If taxes rose to pay for it right now, the US economy would grind to a halt because the people would revolt.

Here’s how you stop war: don’t let governments issue bonds to finance it.

Then we’d have to conduct brain surgery on every politician in an executive office to control the power junkies…

Power warps brains more than government budgets

I’m not kidding. Science is coming to the same conclusion philosophers of yesteryear already knew: power is dangerous stuff, and the political kind is the worst.

Think Lord Acton: power corrupts, and absolute power corrupts absolutely.

The Australian Financial Review had a piece on how power affects the brain on the weekend.

A psychology professor did experiments over two decades. He found that subjects under the influence of power acted as if they had suffered a traumatic brain injury.

They became more impulsive, less risk aware and less sympathetic to other people. Their empathy is impaired neurologically.

Politicians at the high end get it even worse, according to a different study – including manifest contempt for others and loss of contact with reality.

You only have to look at the long list of US Presidents since the Second World War to see a bunch of nutjobs.

This is why political power is so dangerous. I like the way writer Richard Maybury puts it. It’s the legalised privilege of using brute force on people who have not harmed anyone. Governments can legally attack and coerce. You and I can’t.

America’s founding fathers knew a thing or two about this. It’s why they set up a system of liberty – note, not democracy – to handle it. They wanted to put a limit on government encroachment.

Otherwise you end up with what we’ve got: a monstrous bureaucracy that’s deals out special favours. They either destroy the economy through taxation…or shovel it into the future destined for a budget collapse or a currency crisis.

Here’s why the libertarian ideal remains just as relevant today as when Thomas Jefferson said so eloquently:

A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.’

Good government indeed.

Best wishes,

Callum Newman
Editor, The Daily Reckoning Australia