On the Impermanence of Conditions, Bad or Good

This world of dew
Is a world of dew

And yet, and yet…

—Issa

The spectacle of politics in the nation’s capital today is appalling. A good friend minces no words: “…Government is exploitive, inept, corrupt, self serving, incompetent, misguided, terminally stupid, over reaching, profligate and too anxious to engage in military adventures…”

I agree, but then, it’s the top of a Grand Supercycle bull market in social mood, what else should we expect?

Readers might wish to know what a Supercycle phase has to do with what appear to be intractable problems in Washington. Everything, I would respond, taking the matter up piecemeal:

Corruption

It exists in every institution with access to other people’s money or resources. There is corruption in government, yes. But also in corporations, school systems, hospitals, banks, charities, bars, restaurants, and hair salons (employees filch hair products). The level of corruption fluctuates with social mood. It flourishes when organizations are lax. As social mood rises, complacency increases and institutional oversight declines, giving greater opportunity to the sociopaths in our midst. Corruption skyrockets towards the end of a long bull market–not just in government. The most venal, reprehensible, self-dealing actions I have ever come across were committed by corporate suits and Wall Street wiseguys during bull markets.

The endgame comes in the hard down phase of the bear market that follows. Reading the history of the thirties, we can see where the crooks were taken to the shed after the excesses of the twenties. As bad as corruption is today, we can expect that the redress of grievance period for this era lies dead ahead.

Stupidity and Incompetence

During periods of growth and prosperity, hundreds of thousands of empty slots magically appear on org charts in both the private sector and in government. Most are filled by folks who, as Drucker put it, rise to their level of incompetence. I spent nearly forty years in the corporate world, mostly in sales, and I would match the stupidity and incompetence I encountered among managers of the world class companies I worked for with the worst cases in government.

A bear market forces boards of directors to get rid of deadwood in business, and a depression has the voters throwing the bums in government out.

Bear markets also force frugality on organizations in both the public and the private sector.

Militarism, American Style

Militarily, the nation’s mood swings from adventurousness to isolationism. But global intelligence expert, George Friedman writes that, upon taking office, every president immediately finds that the nation’s security requires that we have a global military presence. We wish to trade, to export our goods and to import those of our trading partners around the world. In order to do this we must have accessible airspace and secure shipping lanes.

If we do not assure ourselves and our trading partners safe passage through the Panama Canal, the Straights of Hormuz, The Straight of Malacca, The Gulf of Aden or the Suez Canal, who will? And if Somalian pirates dare to plunder our shipping, they better damn well know we will send Navy Seals to make sushi out of them. If we ever decide to bring our military assets home, we can be certain that other nations, not necessarily with our interests in mind, will fill the vacuum.

War is bad, and there are bad wars. That is why I believe the nation should reinstate universal draft. Let the president face our soldiers’ mothers first before sending us off to war.

My friend also says, “Shrink the empire. Be more like Switzerland.” That’s not how I see it. Switzerland smugly claims neutrality while making their tidy sums providing numbered bank accounts for Russian mafia, Colombian drug lords and American tax dodgers. Yet, when they want to send a boatload of  Tag Heuer watches to Chinese oligarchs, they  expect American taxpayers to furnish the navy that gives safe passage to their goods.

What Ralph Elliott saw as “Nature’s Way” was that the rise in markets and economic activity in response to a free society’s desire to survive and thrive naturally sets up bear markets as tools for flushing out the excesses generated during the up phase.

Corruption sucks, but is part of human nature. I hold that competence and honesty in government and private institutions fluctuate with the cycle of social mood. Institutions are not bad, people’s behavior is bad at times and better after the corrective phases in social mood. My view is that great improvement in society’s behavior and the effectiveness of our government will follow the down phase in social mood.

Finally, I have lived in six countries, and am on speaking terms with the politics of a dozen others. I will take American corruption at its worst over what citizens in Latin America, Asia, Africa and the Middle East are subjected to at any time.

Cheers,

Rod

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