This comment is by John Pugsley, Chairman of The Sovereign Society. A long-time hard-money advocate, he authored several best-sellers in the 1970s and 1980s, including Common Sense Economics, The Alpha Strategy, and The Copper Play.
A century and a half ago, Darwin ignited a revolution in human understanding by positing that biological evolution weeds the garden of life on earth, casting out organisms that fail to adapt to threats or changes in their environment. Those that adapt procreate and leave descendents. Those that don't, leave fewer or no descendents. It was another century before we learned that genes carried in DNA were the mechanism of this evolutionary cleansing.
Human history, particularly the history of science and technology, hints that ideas also succumb to evolution's relentless culling. Biologist Richard Dawkins suggested calling them memes. "Just as genes propagate themselves in the gene pool by leaping from body to body via sperms or eggs, so memes propagate themselves in the meme pool by leaping from brain to brain..." Flowing through time in the collective memory of culture, the most useful survive and thus better and better ideas evolve.
Memes in the physical sciences have clearly improved through natural selection, but the pace of evolution in the social sciences, particularly in economics, has been glacially slow.
This fact came to mind last week as I read Ben Bernanke's keynote address at the Thirtieth Annual Economic Symposium in Jackson Hole, Wyoming. His talk, titled "Global Economic Integration: What's New and What's Not?" provided thought-provoking commentary on the history of globalization, and the political obstacles it has encountered over the centuries.
When economies are open, he acknowledged, "the expansion of trade opportunities tends to change the mix of goods that each country produces....The resulting shifts in the structure of production impose costs on workers and business owners in some industries and thus create a constituency that opposes the process of economic integration." [Emphasis added.]
In plain talk, special interests lobby politicians in each sovereign jurisdiction to construct barriers of regulations, tariffs, and outright prohibition that block foreign imports or subsidize domestic exports. The true impediments to globalization have always been governments, and the immense cost of this interference has been born by the consuming public. Government intervention in economic affairs has thus been a drag on the progress of every nation that has used it.
Bernanke appears pro-globalization, and spoke positively about its history. "Two thousand years ago," he noted "the Romans unified their far-flung empire through an extensive transportation network and a common language, legal system, and currency."
Yet he excluded the interventionist role that central bankers have played over the centuries. He suggested that Roman currency helped early globalization, but failed to mention that Roman emperors controlled the issue of money as a means of plundering the public, thus contributing to the fall of the empire. Effectively similar schemes of plunder are now managed by Mr. Bernanke and his central-bank brethren.
Natural selection over two thousand years has not cast out the most destructive memes, which are the ideas that the governments must control money creation, and must intervene in the exchange of goods between individuals. Unfortunately, evolution in the physical sciences has given government a more efficient money technology. Instead of being forced to clip coins, as the Roman emperors did (oh, government still does that, as I described in a recent A-letter), the central bankers now create money with the click of a mouse.
In spite of Mr. Bernanke's apparent support for globalization and free trade, he and the politicians that appointed him neither believe in free currencies, nor in free trade. When their constituencies demand it, they quickly intervene in both currency and trade, as do their counterparts around the world. Memetic evolution does appear to work, but in the case of government intervention in the free market, it is working with glacial slowness.
Human nature compels individuals to protect themselves, so in the end the politicians and their appointed bureaucrats who conspire to control what money you can use, what you can buy, at what price, and from whom, will fail. Relentless evolution will ultimately cast such flawed memes out of the garden. But it won't happen in your lifetime. Your challenge and mine is to understand the nature of the attack, and immunize ourselves and our wealth.
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