The Bear’s Lair: The first retrograde century since the 14th

Judging by its first 21 years and the prospects therefrom, there is a good sporting chance that the 21st century will be a grim one for most people. Since at least mediaeval times, each century has been an improvement on the previous one, for ordinary people living through it. Incomes have risen, technology has made lives easier, endemic violence both small-scale and large-scale has declined in frequency. The 21st century may be the first since the 14th that reverses this trend.

Wars or no wars, the 20th century was a lot better for humanity on average than the 19th. The world’s standard of living was vastly higher, and that was reflected in better life expectancy, lower infant mortality and an increasing number of cures for the more unpleasant diseases. The same was true about the 19th century as opposed to the 18th – the Industrial Revolution had a truly massive effect on Western living standards and over the century as a whole living standards saw some improvement even in poorer countries.

Going back further, the comparisons are trickier. In Western Europe, the 18th century was undoubtedly pleasanter than the 17th, with living standards trending upwards and wars having become mere gentlemanly skirmishes. However, in India, the 18th century was a lot darker than the 17th century, as the Mughal Empire fell apart and its successor states (including the East India Company) looted and impoverished the populace.

The 17th Century to 16th Century is an even more difficult comparison. In England, you had the Scientific Revolution and the quite rapid recovery in living standards after the Restoration, as good government took hold. On the other hand, in Germany you had the Thirty Years War – although the 16th century was not without its unpleasant wars, either. India and China probably found the 17th century pleasanter than the 16th, however, so the overall comparison still favors the 17th century.

The 16th to 15th century comparison is one where it is tough to claim clear superiority for the later century. China was marginally in decline and the Americas suffered the terrible effects of smallpox and the conquistadores. On the other hand, living standards in Europe were as high in the 16th century as in the 15th, while the explosion of learning known as the Renaissance and the more widespread adoption of printing technology increased both literacy and ordinary people’s intellectual horizons.

15th to 14th is an easy win. You can get a good impression of it from Ian Mortimer’s time travelling/reincarnation fantasy: “The Outcasts of Time” (Pegasus Books, 2018) where his protagonists, starting in 1348, must spend a day in each of the next six centuries, proceeding 99 years at a time. To them, 1447 seems a land of milk and honey, where nobody is poor – the Black Death has wiped out 40-50% of the population, while leaving the cultivated land, so peasant living standards are about as good as at any time before the Industrial Revolution, and Merrie England reigns. The same effect would have been seen all over Europe and in China, which also lost population in the 14th century.

Conversely, comparing the 14th century to the 13th, the 14th is a clear loser. In Europe, the first half of the century suffers from overpopulation and the second half from repeated plagues – not for nothing did Barbara Tuchman call it “The calamitous 14th Century.” The 13th century, conversely, had been the great age of cathedral building, and the relative riches and peace of 13th century Europe can be benchmarked by its ability to build cathedrals. In China, the 14th century was one of decay, as the Yuan dynasty succumbed to hyperinflation from excessive paper money, failing to preserve the tranquility and high living standards of the Southern Song, who were extinguished in 1279.

So, with a possible asterisk over the 16th/15th century comparison, we have established that the 14th century was the last clear loser, in which life was more “nasty, brutish and short” than in the preceding century. At the start of the century in which we are living, one would have laughed mockingly at the idea that the 21st/20th comparison might repeat that failure. After all, the 20th century contained two major wars, while in 2000 the world seemed to have settled to a peaceful if slightly louche U.S. hegemony, with even the Third World reducing its level of absolute poverty rapidly as globalization brought its economies fully into the world capitalist trading system.

Since 2000, it has all gone wrong, largely because of inept management in the West. The “9/11 attacks” of 2001 were tragic, but should not have been geopolitically very significant, except that the George W. Bush administration grossly overreacted to them, engaging in a fruitless crusade in the Middle East that has lasted 20 years and immeasurably drained U.S. finances, military strength and above all geopolitical prestige. He should have taken advice from a British Tory of Margaret Thatcher’s generation, for example Thatcher herself, who lived through an IRA bombing campaign like the 1812 Overture, lost two close friends and almost her life thereby, and yet stayed staunch to first principles and did not allow it to override the much more important work her government was doing, economically and geopolitically.

The second terrible error that has blighted the 21st century is the “funny money” policies pursued by the Fed and other central banks since around 2000. Fed chairman Alan Greenspan deviated from well-managed monetarism at the FOMC meeting in February 1995, thereby causing the 1995-2000 stock market bubble – he decried “irrational exuberance” in December 1996, but did nothing to rein it in. Then he erred again in 2003, forcing interest rates far below their natural level, thereby sparking off the housing and subprime mortgage bubble of 2003-07. Ben Bernanke gave a feeble theoretical backing for this Keynesian madness, then made it worse after 2010, with his zero interest rates and QE.

Now inflation has risen close to double-digit levels, and the Fed is doing nothing useful to rein it in – if inflation is at even 6%, you need a Federal Funds rate of at least 8% to lower it – three ¼% rises in a year won’t have any useful effect at all. Real interest rates are currently at least minus 6%, a level at which it makes sense to built ziggurats in all the public parks and gain a massive annual interest rate subsidy between the borrowing rate of say 2% and the 6% average value rise in the ziggurat, which can be devoted to the worship of Baal-Marduk, to the great benefit of everybody except the maidens destined for human sacrifice!

We are now in the process of embarking on a third grotesque policy error that will impoverish the world: engaging in massive government-led distortions of our economy in the name of combating global warming. Global warming appears to be real – marginally – but a skeptical read of the latest U.N. report suggests we are talking about 1 degree Celsius from current levels by 2100, with sea levels rising a few inches at most.

However, the incessant “wokie” hysteria about global warming, with demands to take over the global economy, have the world’s ultra-feeble governments running scared, with only the admirable Donald Trump offering some resistance during his term in office. Allowing the wokies to micro-manage the world economy will cause a blizzard of idiotic expensive and restrictive regulations, making ordinary people very much poorer, both in the rich West and in emerging markets. (Emerging markets will of course take no notice of wokie nonsense, continuing to burn healthy coal as did our ancestors, but will find their economies irretrievably damaged by the Western collapse.)

The United States has been abominably governed for almost all the period since January 2001 – Trump was a little better than that, but his monetary and fiscal policies were truly dreadful, and he did not last as long as he should have. Other countries have been almost equally badly run – the Komsomol youth leader Angela Merkel being an especially egregious example. In consequence, our real living standards are already falling below those of 2000, and there is no bottom in sight. (Germany has done a little better, but Japan, Britain and Italy haven’t, in the last decade at least.) And ask yourself: are you really truly sure that, given current inept Western management and the tendency to pander to wokie fanaticism about global warming, the next two decades won’t see a war of at least similar destructiveness to World Wars I and II – hopefully not worse, keep your fingers crossed!

There is still a chance for new leadership and new economic policies to appear, at least at the already somewhat degraded level of the late 20th century, but maybe in a blissful world, restoring the much sounder policies and leadership quality of the early 19th century!

But they had better hurry up!

(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)