The River Is Socialist

The S&A Digest
   
  February 09, 2013
  The S&A Digest
Editor's note: Richard Maybury is among our favorite free-market thinkers and historians today… His Uncle Eric book series and U.S. & World Early Warning Report (EWR) are must-reads for anyone interested in money, business, history, and government.

In today's edition of the weekend Masters Series, Richard discusses the "idiocracy" (idiocy + bureaucracy) running the world's governments… the political disasters that mentality causes… and the "unplanned chaos" the world now finds itself in.

This piece – originally published in an August 2011 issue of EWR – is one of the most interesting takes on government hubris we've ever read…

The River Is Socialist
By Richard Maybury

The Mississippi offers an important lesson for investors.

I'll never forget the first time I drove along the river's banks. I had to look up at the passing ships because in some places, the bed of the river is so high, it's above the surrounding land. It can be kept confined to its channel only by dikes. If the dikes were not there, the river would flow out across the surrounding land and destroy everything.

Year after year, decade after decade, the bed of the river rises, and the government responds by raising the dikes. What causes the bed to rise? The dikes.

Here's why…

In college during the mid-1960s, I took a geology course. The professor used the Mississippi as an example of what happens when government "experts" try to improve on natural systems.

The Mississippi is America's largest, most important river, which means its behavior affects millions of voters. In the 1800s, some of these voters built their farms and towns on the river's floodplains.

I once heard another geologist ask angrily, "Why do you think we call it a floodplain?!" In the 1800s, some of the voters decided the government should do something about the flooding. Did the politicians say no? Of course not. They said, give us more money and power, and we will fix your problem. They started building dikes.

My geology professor explained that when a river is confined to its channel, it has no place to dump its silt except in the channel. This raises the bottom of the river, until the river overtops the dikes. Did the politicians admit that building dikes was a bonehead idea? Absolutely not. They said, these worsening floods are a huge problem, but give us more money and power… and we will build the dikes even higher.

And so it has gone for more than a century. The dikes are raised, which lifts the bed of the river, causing more flooding, plus more demands for higher dikes. All the while, the cities on the floodplains grow larger.

In 1883, the great river pilot Mark Twain warned that efforts to control the river were futile. "10 thousand river commissions" could not do it. As you can see on the TV news, he was certainly right.

My professor 46 years ago said it was well understood among geologists that this addiction to dikes, piling mistake on top of mistake, would eventually lead to catastrophe. No one listened, and the government kept on "fixing" the flood problem until here we are today, with a river that is above the surrounding land.

As an aside, it's interesting to note…

… another word for dike is levee, which is the French word "levee," meaning "to lift."

Lots of rivers have levees – mistakes piled on top of mistakes. In 2008, hydrologist Robert Criss showed that the bed of the Mississippi is now so high that over the previous 25 years, Twain's hometown, Hannibal, Mo., had been hit by 10 floods, including one 200-year flood and one 500-year flood.

The insane attempt to improve on a natural system was begun by an Army engineer named Andrew Humphreys (1810-1883). This is the same General Humphreys who led thousands of troops to their deaths in the Civil War, then wrote that he enjoyed battle so much "I felt more like a god than a man." After 1865, Humphreys continued his pursuit of godlike sensations by declaring war on the river.

I'm sure it is not an accident…

… that this attempt to control every inch of America's greatest river system became a hot project during the era the socialism of Karl Marx was on the rise. Socialism is about control, and just as the democratic and republican politicians have controlled the Mississippi into chaos, they've controlled the rest of the economy into chaos, too.

We are ruled by an idiocracy. (Idiocy + bureaucracy.)

It is often said of socialism, and its offspring Keynesianism, that control breeds more control. This can be seen nowhere more clearly than in the idiocracy's attempt to regulate the Mississippi. All of east Europe, Africa, and Asia have been through the socialist meat grinder.

This is why the first word that comes to mind when we think of these areas is not "wealthy," despite their abundance of oil, gold, and other natural riches. West Europe, too. The debacle with the euro and European Union is more of the inevitable disintegration. Don't expect the repeated bailouts and other stopgap measures to accomplish much. It's just more variations of robbing Peter to subsidize Paul.

Again, the government's management of the Mississippi is a good cross section of the idiocracy's management of the whole economy. All the farms, towns, and cities on the river's floodplains are malinvestment caused by the government's efforts to improve the river. They are another example of what I mean when I say the political meddling in the natural economy is so great that I believe there are whole cities in the wrong places doing the wrong things.

The news media refer to Mississippi floods as natural disasters, but the floods are really…

… political disasters

The socialized Mississippi system is a kissing cousin to socialized schools, transportation, monetary system, medical structure, financial framework, and on and on. They all show the same characteristics. Each "fix" creates more problems that need more fixes until it all falls down, which is apparently where we are now.

All this reminds me of the fine book Why Government Doesn't Work, by Harry Browne. Geologists have always known that dikes could not be built to the sky. No one can predict exactly when the boondoggle will come crashing down, but we know it will. Conditions at Hannibal and many other places seem to be saying the end is near. For the economy as a whole, I think the end is near.

An economy is simply too complex for humans to understand and control wisely. The halt to QE2 is starting another shakeout of the malinvestment, so it will be quickly followed by QE3, building the dikes even higher.

On June 7, Fed chief Ben Bernanke (accidentally?) admitted this complexity. In regard to higher capital requirements for banks, and a blizzard of 300 new financial regulations, he was asked, "Has anyone bothered to study the cumulative effect of all these things?" Bernanke's answer was no, "It's just too complicated."

This was an amazing admission that the government's management of the economy is just a collection of shots in the dark. After the nightmare is over, we can make a new start toward an age of peace, liberty, and abundance, but the transition – as the political structures come down and a century of malinvestment is washed away – will be nasty.

Summary

I think the whole world economy in general – and the Mississippi River system in particular – have entered what Austrian philosopher and economist Ludwig von Mises called "planned chaos." This is because neither the river nor the rest of the economy are mechanical… They are organic, and their complexity is far beyond the understanding of humans, socialist or otherwise. This is explained in Chapter 15, "How Things Get Done," in my Uncle Eric book Whatever Happened To Justice?

No one knows how to make the millions of goods that constitute a modern economy, yet all these things get done with no masterminds at all. Chapter 15 explains how. When governments play God, they always do it badly. In the months and years ahead, as you watch the chaos caused by political meddling in the Mississippi, you are watching only a small part of what this meddling has done to the whole world economy and investment markets.

Stay extremely cautious, and don't touch anything that assumes governments will do what is rational.

Regards,

Richard Maybury

Editor's note: Richard began writing his excellent U.S. and World Early Warning Report in 1991. Using a blend of economics, history, geopolitics, and finance, he has built a model for viewing the world that is genuinely unique. His newsletter teaches readers how to understand global issues and apply this knowledge to their businesses, finances, careers, and families. To access Richard's latest research – and try a subscription to the U.S. and World Early Warning Report – click here.

Nina,
Thanks,
I think Richard would be qualified to help. I sent him an e-mail, inviting his participation in the Western Association.
John