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Quite possibly the dumbest thing I’ve heard an economist say


July 17, 2012
Vilnius, Lithuania

In the mid-1800s, a cousin of Charles Darwin by the name of Francis Galton wrote a series of works expanding on an old idea of selective breeding in human beings.

Galton’s theory became known as eugenics. At its core, eugenics was underpinned by an assumption that talent and genius were hereditary traits, and that deliberate breeding could improve the human race.

Within decades, intellectuals were spending their entire careers studying these ideas, quickly spawning a number of different fields dedicated to ‘racial sciences.’

Scholars began closely examining racial differences and building volumes of statistics on everything ranging from intelligence to reproduction to genetic effectiveness in combating disease.

‘Scientists’ would scurry about taking cranial measurements, sizing up jaw lines, calculating forehead slopes, and estimating nose angles… all of which became ‘evidence’ of racial superiority.

It became clear that one race was superior to another because the science of the day said that it was true. And they had the statistics and equations to prove it.

This faux-science became the moral justification for racial segregation and imperialistic expansion.

After all, one could hardly feel bad about conquering and enslaving an entire nation if the science proves that they’re an inferior race.

Nazi officials took these ideas and perverted them even further, wrapping horrific crimes in a blanket of science.

Today, it’s nice to know that human beings are a lot more enlightened. We know that the dimensions of someone’s skull or nose don’t matter much in the way of intelligence or integrity.

And we can wonder with absolute incredulity how anyone could have passed off such nonsense as science.

Here’s the irony, though. In the future, they’ll wonder the same thing about us. The difference is that our faux-science is economics.

In the future, they’ll wonder with utter incredulity how these ridiculous assertions about conjuring money out of thin air and borrowing your way out of debt could possibly pass as science.

They’ll be mystified at how political leaders listen to these modern day soothsayers, directing national policy and robbing wealth from hundreds of millions of people based on this faux-science.

And they’ll be completely floored when they see that we actually award our most esteemed prizes to these men who tell us that we can spend our way out of recession and tax our way into prosperity.

To give you an example, I’ve just finished Nobel laureate Joseph Stiglitz’s new book The Price of Inequality in which he writes something that may be the dumbest thing I’ve ever heard from an economist:

“[T]he success of [Apple and Google], and indeed the viability of our entire economy, depends heavily on a well-performing public sector. There are creative entrepreneurs all over the world. What makes a difference. . . is the government.”

Yes, in the eyes of our most decorated ‘scientists’, the brilliance and guile of Ingvar Kamprad, Sam Walton, Ray Kroc, Asa Candler, Richard Branson, Steve Jobs, and millions of others are far less important than an effective government bureaucracy.

His entire book, in fact, is an impassioned argument for even more government control and redistribution of wealth. Right… because it’s been working so well.

These ideas are totally absurd. Yet this what passes as science today. And because it’s science, society simply believes it to be true.

No doubt, people in the future will look back, and they’ll wonder… but they won’t understand one bit.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • John Pitt-Rivers

    Galton was a genius!

  • Otherworldtraveller

    Hello Simon, While I agree with your argument as you present it, are you sure you interpreted Stiglitz’s statement correctly? I mean, if he was talking about government being a source of creativity and wealth that needs to participate if entrepreneurs are going to succeed, that’s one thing; a stupid argument.
    However, maybe he meant that stable, corruption free and fair government that protects property rights is needed for economic success –this idea isn’t so ridiculous, it’s the reason places like the U.S are the source of most innovation while the Somalias, Sudans and Bolivias of the world stagnate.

    Either way, even if stable government is a necessity, I still think it’s only good for progress insofar as it gets the hell out of the way and keeps property and contract secure.

  • Nigel

    Nice piece, Simon, though would add this. In our age of misinformation
    to keep the masses happy while getting financially screwed by the banksters,
    who do you think leaned on nobelprize.org to give a Nobel Prize to this writer
    of such nonsense, Joseph Stieglitz. The same people who benefit from it.

    And anyone who can possibly even contemplate or believe that
    government contributes to the wealth of a nation (misinformation at its “best”)
    needs to wake up fast.

    So by giving Joseph Stiglitz a Nobel Prize, which gives unjustified
    credibility to his work, we can take it as read that he is worth listening to.  It’s just another form of misinformation that
    future scholars will be “taught”.

    Like most other economic
    and political mouthpieces, they make statements without qualification. What is
    the qualification of Stieglitz’s theory that “the viability of
    our entire economy, depends heavily on a well-performing public sector”?
     And I’d also like to see an example of a
    “well-performing public sector”. Because if this statement cannot
    be shown to be true, then the rest of his drivel can be consigned to the wastepaper
    basket where it truly belongs.

  • Blachrome

    Our emperor Barry also got one.  What does that tell you about the selection process? 

  • Preparation H Bomb

    Uhh, well, I don’t know how far off the mark “eugenics” was.  I believe there ARE significant differences between the races, and that these CAN be written about intelligently.   We definitely DO breed for certain personality traits in animals; i.e., “good temperament” – yes it IS genetic.  Ask any horse, dog, or cat breeder!  They don’t just breed for physical desirability; and, if we’re honest about it, human breeding, uncontrolled, produces some pretty baleful results.  Just look in any black ghetto.  If you get out alive, you can report your findings — and what makes it dangerous there is NOT “just socioeconomic conditions.”  It is HEREDITY.  Genetics.  People who twist and mutate their own genes by ingesting chemicals to get high, definitely DO pass those mutilated genes on to their kids, resulting in poor intelligence, inability to make sound judgments, and a general innate tendency to violence.  These things are VERY hard to overcome by willpower; it can be done, and IS done every so often, but not by the vast majority.   I am saying that there definitely ARE groups of people who are superior genetically (check the Asians and Jews….) and groups who are -yup – INFERIOR – genetically; check any and all lower-class people whose people are addicted to drugs and alcohol, and who deprived their children of proper nutrition during pregnancy and during the first 5 years of life.  WE ARE MAMMALS — biologically not that different from dogs, cats, horses, etc. — and genetics is a huge factor in what every single baby born has in terms of raw material for his/her life.  This is a hideously non-PC viewpoint, but, we have lied to ourselves for decades about this, and I would rather get honest about it and deal with that truth.  I am not suggesting ANY social policy with regard to people who are in fact genetically inferior; I do not know what the answer to that is.  I AM saying that it’s high time to get as honest about human breeding as we are about the breeding of top-quality animals.  Just tell the freakin’ TRUTH  instead of perpetrating the lie that somehow, humans are the great exception to what is commonly known to be true with regard to our animal – mammalian – genetics.

  • http://pulse.yahoo.com/_3BW5M5NFVD7YXMBD2PY4UEU6OI Ed_B

    However, maybe he meant that stable, corruption free and fair government that protects property rights is needed for economic success…”

    The next government that can truly provide this will be the 1st one to do so.

  • Eugene Du Bielak

    Economics has never been called a science. Science relies on the truth inherent in natural laws. Water boils at 212 derees F. or 100 degrees Centigrade in Washington DC, Moscow or Peking. Economics, because there is  no natural law, but the activities of myriad humans can result in different outcomes with similar inputs. Thus China’s quasi free economics will function and give initially favorable results, but in the end will follow the same dismal path others have encountered because of the greed and fear of humans.

  • li_bri

    I wonder if Barack Obama read this book just before making his “you didn’t build that” gaffe.  In any case, the debate has seemingly become one of what’s MORE important; government or the entrepreneur?  I say the entrepreneur because the entrepreneur…with his fellow citizen…can build a government.  On the other hand, government cannot create entrepreneurs.

  • http://twitter.com/bsfootprint bsfootprint.com

    “They’ll be mystified at how political leaders listen to these modern day soothsayers, directing national policy and robbing wealth from hundreds of millions of people based on this faux-science.”

    Political leaders listen because it serves their purposes.

    Edit: Yes, governments make the difference: a government that refrains from doing damage certainly improves the chances for successful business and wealth creation. Let’s not forget that a government can be both ‘well-performing’ *and* tyrannical or destructive to free enterprise.

  • http://www.facebook.com/scott.worley3 Scott Worley

     The quote is taken out of context.  It’s basically saying if Steve Jobs or Henry Ford were born in say Mexico instead of America they would not have been able to build multi-national corporations.  We as Americans have a much better chance in business than those in other nations.  Why do you think Linus the swede who wrote Linux’s kernel code gave it away as opposed to making money off of it.  The mentality, culture, and opportunity are vastly different in places other than America.  This is largely due to the government’s policies.

    • bknewyork

      This is a specious comment. It is not because of govt policies. Their success is abettted by the relative LACK of govt interference. Your comment would equate to someone thanking a bully for no longer pounding you in the head.

  • Brianna Aubin

    I’m kind of mystified that all these people who didn’t read the book are trying to interpret the meaning of the quote to the one who did read it.

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