This week, the Bear’s Lair column celebrates its Silver Jubilee. The first column appeared mid-afternoon on Election Day 2000, predicting a massive market slump (this is a Bearish column, after all!) and an electoral wipeout in 2004 for the then unknown winner of the 2000 presidential election. The full 25 years of columns can now be viewed in the Archive section of TBWNS.com and it has to be said, there are a lot of very wild misses in the predictions category! Conversely, every now and then, this column says something that nobody else says for a couple of decades, which then becomes conventional wisdom. The weekly puzzle for readers is to figure which column falls into which category!
There are 1,302 columns in all, averaging a little over 1,500 words, so a total of about 2 million words. That sounds like a stupendous achievement until you realize that Edward, Earl of Clarendon (1609-74), between his exile beginning in December 1667 and his death in December 1674 achieved the same number of words (if fewer sentences – this one is like one of his)! between his “History of the Great Rebellion” his “Life” his “Rebellion and Civil War in Ireland” his refutation of Hobbes’ Leviathan, two volumes of religious essays and another volume of miscellaneous essays, in only 7 years, moving between lodgings, writing with a quill pen by candlelight in between attacks of gout and an attempted murder by a group of English sailors who held the exiled and powerless Clarendon responsible for their lack of pay. I defer, my Lord, I defer!
My initial subject was of course the bursting of the 1997-2000 dot-com bubble. The stock market had peaked in March 2000 and declined gently through the summer but the contested election in November 2000 caused the first real downwards lurch. The third Bear’s Lair on November 20 was “The New Economy – Bubble or Fraud?” which suggested that, based on the amount of dodgy accounting, the stock options scams and the money flying about, there must have been a fair amount of fraud involved. I wrote similar pieces about the housing finance market in 2005-07, about cryptos at various points, about the “Bros” meme stock bubble of 2021 and about the recent market – surely AI is as capable of committing fraud as well as any human, indeed probably more capable! The only market without fraud has been that for gold and gold mines – I was not yet writing when the Bre-X fraud went down in 1996-97, so in my writing lifetime, gold investments have been almost spotless! On a lighter note, “An E-Christmas Carol” in December 2001 applied the Scrooge story to the 1999 tech mania – enjoy!
This column’s prognosticating skills were demonstrated in 2002 with a 2-part column “The World in 2025” (part 2) which usefully targeted this year. It shows first that the best quarter-century for world growth since 1900 was not the globalization and economic opening quarter century of 1975-2000 but the preceding quarter-century of 1950-75, when half the world was economically cut off and subjected to central planning. Given that most of the world’s growth occurs in advanced economies, that is a staggering critique of government bureaucracy and over-regulation, both of which became far more prevalent after 1975 because of the environmental movement. If the Berlin Wall and the Cultural Revolution retarded growth less than the EU and the Environmental Protection Agency, that suggests that the economic impact of environmentalists is worse than that of the Red Army rolling tanks through your back yard.
The column forecast an increase in protectionism (a good prediction!) and an end to the unipolar world (“for the first time since the turning inward of the Ming civilization around 1430, the world’s agenda will no longer be set by people of European origin”) – only a little premature, I think. Furthermore “the apparent easy Western dominance of the 1990s was a mirage” (very good!) By 2025, we will have a better idea of how severe global warming will be but if the approach chosen to deal with it is the EU’s “Nanny Knows Best” it will be very expensive and economically damaging. (Spot on!) Public financing will be a mess, because of baby boom retirements (good, but obvious) and if we attempt to solve it through immigration, the social consequences will be dire. (also good). Tech advances are slowing (questionable) but by 2025 “we may all be watching banal propagandist Hollywood movies on our cell phones, but so what?” (spot on!) Space exploration won’t get far by 2025 but genetic engineering will (whoops- sorry!) Finally, the stock market will have deflated and the Dow by the end of 2025 will be at 10,362.7 (since it’s currently at over 47,000 that’s one HELL of a bear market forecast for the next six weeks)!
Overall, a mixed but interesting bag. Glad I’m not running anybody’s stock portfolio but my own!
The Bear’s Lair became increasingly skeptical of the George W. Bush administration’s interventionist foreign policy, notably as set out in Bush’s Second Inaugural Address, which envisaged a full remaking of the world to favor American-style democracy. That column “The costs of Wilsonism” pointed out that Bush’s approach was very similar to the liberal Woodrow Wilson’s dreams at the Congress of Versailles, which led directly to innumerable conflicts from World War II to the Yugoslav wars of the 1990s. It ended by suggesting that Bush fire his speechwriters.
For today’s foreign policy, Bear’s Lair identified “The costs of Vladimir Putin” in January 2006 (one of several such Putin-critical columns). It also pointed out in “The Teetering Domino” the following year the threat from Putin and the internal contradictions in Ukraine’s current Soviet-imposed borders, which prevented the emergence of the one genuinely reformist leader, Yulia Tymoshenko. It did not directly suggest peacefully sawing off eastern Ukraine and giving it to Russia, but it should have done.
This column identified very early the costs of loose border policies, that had been pursued on a bipartisan basis since Reagan’s Presidency, if not since 1965. Bush’s attempt to engineer yet another illegal alien amnesty in January 2004 produced a column “Border Trouble” that identified the costs to ordinary Americans of high immigration and the unpleasant lobby favoring it. The Bear’s Lair view has hardened further since then and it rejoices that President Trump is finally moving in the right direction, although it also wants him to end the “indentured servitude” of H1B and H2B visas.
The Bear’s Lair comments frequently on markets and on the economic system that Americans laughably describe as capitalism. A 2003 column “Shares not Stakes” highlighted how U.S. business ethics, never all that elevated, declined sharply further around the time business schools instituted formal ethics courses, and how the mania for stock options (and share buybacks, not yet a big problem in 2003) led to top management managing companies solely to goose the short-term stock price, to the long-term detriment of the company’s shareholders. A light-hearted piece two years later “The Incompetent Market Hypothesis” suggested that price discovery in the U.S. stock market was not Efficient (which would prevent clever shareholders extracting extra returns) but Incompetent, with the market prone to idiotic fads and bubbles, so that those immune to fashion and not responsible to a dozy Investment Committee or Board of Trustees could do very well indeed.
Outside the market area, the column frequently comments on political issues when they have economic implications, particularly in relation to property rights, this column’s most important core value. Sometimes these commentaries are defensive as in “The Real Supreme Court issue” denouncing the Court’s disgraceful 2005 Kelo v. New London judgement, in which Suzette Kelo was thrown out of her house to make way for a shopping center. Sometimes, the columns urge change as in my 2010 “Tax Code for Ebenezer Scrooge” which apart from suggesting that Dickens’ anti-hero was a productive, economically creative individual, proposed that he would rightly prefer a tax code without any exemptions or deductions for charities, which he regarded (as does this column) as predominantly scams and subsidies for the ultra-rich with an overall negative economic effect. I have returned to this subject several times in the years since; eventually, if you bang on a door for long enough, it swings open!
Globally, there has been a huge change in the 25 years of the Bear’s Lair’s existence, in the end of the free-trading globalized world of the 1990s and its replacement by a world that is both protectionist and multipolar. I had forecast a return to protectionism in my 2002 forecast for 2025 and took the topic further with “Towards a Protectionist Future” in 2007, which suggested that both tariffs and restrictions on foreign ownership made more sense than unilateral free trade on which other countries cheated. I then combined this with envisaging in 2010’s “Back to the Kaiser’s World” a return to a deglobalized world of Manichean struggle, in which unilateral free trade was wholly self-destructive while politicized international institutions were a menace to sound economies. I also suggested that the new Kaiser Wilhelm II would be Chinese! That piece led to several essays and presentations on “Deglobalization” in which I was at least half a decade ahead of the curve.
Finally, I attach my first column in 2009 on a subject on which I have already written one book and am in the process of writing another: “Lessons from the Industrial Revolution.” As well as discussing the causes thereof, this drew a number of lessons for today, notably the importance of private property and free markets, and the advantage of developing a skilled well-paid workforce, because having the world’s most expensive workforce will drive innovation. That is as true today as when Lord Liverpool proposed the Corn Laws in 1815, indeed even more so, since it seems likely that the country that optimizes the use of Artificial Intelligence will win the remainder of the 21st Century. Thus, now as in 1815, low-skill or cut-price immigration should be minimized.
Please feel free to explore the website and read all 1,302 columns if you want, though I don’t recommend it! Meanwhile, until next week, and I trust that an Artificial Intelligence-assisted and robot Meccano-enhanced version of me will still be around, clanking happily, to conduct a similar review of the next quarter-century in November 2050!
-0-
(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.)