The Bear’s Lair: The Coming Fall of the Meritocracy

The last five years have been marked in most Western societies by a populist revolt against the values of a leftist university-educated elite. That elite had appeared invulnerable, and increasingly separated from the rest of us, as Charles Murray described in his 2012 study “Coming Apart.” There are thus two questions to be answered: how did the elite become so cut-off and misguided, and will its rule survive the populist revolt? Continue reading

The Bear’s Lair: Back to the economics of 1792

When William Pitt the younger made his great and optimistic Budget speech of 1792, he attributed Britain’s increased prosperity not to technological improvement but to the wealth-enhancing effect of the compounding increase in the country’s capital stock. Only a generation later, in the administration of Robert, Earl of Liverpool, was technological change given credit for the country’s growth and prosperity. Today, as productivity growth slows or even halts, we may be returning to the economics of 1792, in which only capital increase brings greater wealth. This has uncomfortable implications. Continue reading

The Bear’s Lair: Trump’s iconoclasm is a feature, not a bug

Three years into his administration, President Donald Trump is subject to a level of obloquy surprising given the U.S. economy’s benign performance. Not only his political opponents, but even some nominal “conservatives” want to impeach him. The reason is clear: rigid thinkers committed to the “icons” of past consensus policy loathe President Trump with unparalleled venom for breaking those icons. But for more dispassionate thinkers, Trump’s iconoclasm clears the way to a better future. Continue reading

The Bear’s Lair: 2020s look like a Bear bonanza

Ten years ago this week, this column asked: “Will the Tens be another Bear decade?” predicting that the stock market in late 2019 would be lower than in late 2009. Alas, that prediction was complete rubbish. Yet the column’s economic forecast – that the early years of the Tens would be grim, but improvement would come late in the decade – was quite close. The stock market however let the Bears down, making everybody else richer in the process. So, let us repeat the process for the 2020s, perhaps learning from previous mistakes (you never know)! Continue reading

The Bear’s Lair: Towards a working-class Tory Britain

Boris Johnson’s Conservative “Tory” party’s big victory in the British election December 12 was achieved by winning seats that had been Labour since 1987, 1935 and even 1922. His majority thus represents far more working-class voters from the North of England – and far fewer rich Londoners – than any previous Tory government. To survive the next election in 2024, he must pursue a working-class Toryism quite different from the party’s policies of the Cameron/May era, or those of Margaret Thatcher. Continue reading

The Bear’s Lair: Yale Model Goes Whiffen-Poof

All 60 of the United States’ leading university endowments underperformed a cheap “tracker fund” over the past decade, according to a study reported in the Financial Times. The culprit is the “Yale Model” of university endowment investment, whereby they focus on private equity, hedge funds and unquoted investments rather than on ordinary stock markets. From this data, the Yale Model clearly has not worked, at least in the last decade. It is worth examining what went wrong. Continue reading

The Bear’s Lair: The case for gold grows ever stronger

In 1982-2000, I avoided large losses by completely ignoring gold as an investment vehicle — I started thinking about it again when in July 2000 I noticed that Vanguard’s precious metals fund was its only loser over the preceding 5 years. Since 2008, I have invested consistently in gold mining stocks, and enjoyed good years (2009-10, 2016-19) and bad years (2011-15) thereby. Yet the intellectual case for gold, as a store of reality in an increasingly unreal world, grows stronger by the day. Let me explain…. Continue reading

The Bear’s Lair: How poor countries can beat de-globalization

The outstanding winners from the 1991-2016 policies of globalization were dwellers in poor countries. With international sourcing much cheaper and easier and foreign investment flows soaring, well-run poor countries could attract capital, jobs and export-producing industries in profusion, producing revenues that could educate their workforce and hugely raise their living standards. For poor countries, the world has now become harder. Yet even without globalization, well-run poor countries can still become middle-income and then rich. Continue reading

The Bear’s Lair: Britain without Brentry

December 12’s U.K. election is essentially a referendum on Brexit, with much of the population fearing its outcome. The post-Brexit future is unclear. However, we can say more about the past than the future, even a past depending on an event that did not happen, since most other variables are known. Hence it is worthwhile to look at the potential trajectory for Britain since 1963, had it taken “No” for an answer after President Charles de Gaulle’s veto of Britain’s entry to the Common Market. The exercise is strangely reassuring. Continue reading

The Bear’s Lair: Back to a 17th Century economic policy

In an earlier column, I reflected gloomily on the terminal debt crash that the world is likely to suffer around 2040, and on the possibility that productivity growth is slowly disappearing. If those hypotheses are true – and I would not claim them as more than probable — then we will return in our economic management to the last period before industrialization brought perpetual progress – the 17th Century. Continue reading