The Democratic Party Then and Now

Marcus Licinius Crassus*

Kamal Harris

I had Fox News on while working on my computer.   I was unnerved by the complacent, far-left  orientation of the second Democratic presidential debate. If this is what America's political system is producing, even given that the Democrats are the left party, the country is in serious trouble. 

We are looking at the stage of Roman decline when the plebeian party, the Populares, formed the First Triumverate and established the pathway to empire. We're well on the way to a Caesarean dictatorship. 

What I'm thinking is that establishing a second residence overseas will be a useful insurance policy.  Perhaps I can find a country that gives free healthcare to illegal aliens and isn't dominated by predatory criminals like Bernie Sanders, Kamala Harris, and Joe Biden.

*They hadn't invented the steam engine yet, but dictator wannabes were as prevalent then as they are now. 

The Glazov Gang's "Mitchell Langbert Moment"

Jamie Glazov of the Glazov Gang asked me to do a podcast on how conservatives can apply Alinsky's tactics in Rules for Radicals.  I will be doing a follow-up video on why universities became radical.

Groupthink and Academic Culture

Dan Klein gives a lecture on academic groupthink, tying in our joint paper and my "Heterogeneity" paper. Dan asks how groupthink can dominate entire academic disciplines.

Departmentally based decision making, collegiality, depends on majority vote.  Democratic processes are eminently susceptible to conformity pressure, as de Tocqueville noticed in the 1830s.

Scholars like Irving Janis (also Milgram and Asch) have suggested that groups tend to conform.  Love of people like ourselves, homophily, leads to the eradication of alternative viewpoints.  Highly intelligent people are easily capable of groupthink, as Janis's book Groupthink points out with respect to the Kennedy cabinet.  Klein points out that academic beliefs are more closely related to self-image than the decisions that Janis describes; the nature of academics' beliefs is closer to Jonathan Haidt's "sacred beliefs."

Klein uses the example of the  ideological field of history. At the departmental level, homophily leads to groupthink.  At the national level, the field's hierarchical hiring allows the elite universities to create a monotone ideological perspective.  Learned societies scour non-conforming academics by keeping them from publication opportunities.  "The profession answers these questions for all."

Universities are the reverse of what they appear. They do not encourage thought. They encourage mindless conformity.

Klein asks: "What if waiters worked as professors do, so each waiter job is controlled by a central waiter department?"  Of course, waiters are not as inept or incompetent as professors because there is no centralized waiters' learned society.

Is Value Investing Dead?

Vitaliy Katsenelson, CFA, has an excellent post on LinkedIn:  “Is Value Investing Dead?”  Katsenelson concludes that it is not, and he is right, although there might be muted returns to value investing for several more years. 

There is a parallel between commodities and value stocks because both are devalued by monetary creation in the early phases of a bubble market. Something similar occurred in the late 1990s, when gold was bottoming near two hundred, and everyone was saying that Warren Buffett had gone the way of the Brontosaurus.

In the early phases of a bubble market, low interest rates stimulate competition. Hence,  enterprises that are viable in the long term face more competition than otherwise because  the Federal Reserve banking cartel subsidizes inefficient competitors.   In the commodity sector viable mines are forced to compete with mines that the Fed artificially makes viable with low interest rates.  The results are supply gluts. 

At some point increasing competition causes bankruptcies of the less viable manufacturers, natural resource firms, and mines. Given intensifying competition, the subsidized interest rates are no longer sufficient to sustain the inefficient producers.   For value stocks, oil firms, and mines, subsidized output strains the least competitive firms, which ultimately go bankrupt. 

At this point in time, we see depressed value in the gold mining, oil, and value stocks.  The depression in those stocks has lasted a long time because the monetary creation of the 2008-2016 period was exceptionally great. The bubble period might continue for several more years.  Before it ends, I would expect higher valuations in the bubble stocks, recently known as the FAANG stocks--Facebook, Apple, Amazon, Netflix, and Google.  In the 1920s radio and automobile stocks played a similar role. In the 1960s the Nifty Fifty, including American Home Products and Xerox, did.  In the late 1990s the Internet stocks such as Drugstore.com and Beauty.com did.  

As artificially intense market competition ends because of supply gluts, the value stocks survive and enter a less competitive environment; so do the most efficient natural resource firms. In a less competitive environment, they thrive.  

Hence, oil wells, miners, and value stocks are depressed in this period, but they have a bright future.  In all bubble periods, the claim that "we have entered a new era" becomes common.  The mania is fueled by the myopic definition of risk as standard deviation, which is  favored by finance economists.  This statistical definition overlooks longitudinal patterns and the effects of crashes on individual well being and stress.

Late-stage-bubble buyers force up the stock prices of the favored, speculative stocks in what Steve Sjuggerud calls a speculative melt-up. The inevitable crash is worst for the most speculative stocks.  There is some spillover to all stocks because of panic selling, but the value stocks then outperform. 

The most important characteristic to make money is patience or persistence.  Another is focus. These are not characteristics taught or valued in American educational institutions, which function with a win-lose, socialistic mindset and emphasize scientism at the expense of common sense.