Sunday, April 5, 2009

Sunday Reading: Mark Steyn

Mark Steyn writes a brilliant column in the Orange County Register. (Read the whole thing)

Let it be said that in recent years in America, the United Kingdom and certain other countries the "financial sector" grew too big. In The Atlantic, Simon Johnson points out that, from 1973-85, it was responsible for about 16 percent of U.S. corporate profits. By this decade, it was up to 41 percent. That's higher than healthy, but it wouldn't have got anywhere near that high if government didn't annex so much of your wealth – through everything from income tax to small-business regulation – that it's become increasingly difficult to improve your lot by working hard, making stuff, selling it. Instead, in order to fund a more comfortable retirement and much else, large numbers of people became "investors" – albeit not as the term is traditionally understood: Instead, you work for some company, and it puts some money on your behalf in some sort of account that somebody on the 12th floor pools together with all the others and gives to somebody else in New York to disperse among various corporations hither and yon. You've no idea what you're "investing" in, but it keeps going up, so why do you care? That's not like a 19th century chappie saying he's starting a rubber plantation in Malaya and, since the faster shipping routes out of Singapore, it may be worth your while owning 25 percent of it. Or a guy in 1929 barking "Buy this!" and "Sell that!" at his broker every morning. Instead, an exaggerated return on mediocre assets became accepted as a permanent feature of life.

1 comment:

  1. Actually this happens every generation. The boom bust mania cycle. Some are bigger then others. This one may be bigger then 1929, and on par with the South Sea Bubble and the Mississippi Bubble.
    In the 1960s there was a big stock boom. The people involved were too young to know about 1929. In the late 60s the saying was "your only risk was not owning the nifty 50 stocks", like Polaroid and Xerox. The Dow Jones did not get back to the late 1960s level until the 1980s.
    The 1929 Dow Jones did not get back to break even until the mid 1950s. Japan`s 1980s market has still not recovered. The cycle never ends. The 1920s speculators were too young to remember the Panic of 1907. Starting in the 2030s, there will most likely be another speculative mania of one sort or another.