The World As It Is: Post-2008 Economic Reality Part 2

Part 1

In the five years that have elapsed since the market bottom of March 2009, never before in the history of human civilization has so much wealth been created in any prior five year interval, including the final five years of the dotcom boom from 1995-2000. The good or bad news – depending on where you lie on the bell curve – is that for individuals of superior intelligence, good work ethic, and possessing high-paying skills such as computer programming, upward mobility has never been easier. The free market has beaten you a path to riches. More than ever, IQ has become the new caste system in our hyper-meritocracy, so while we have all this wealth being created, most of it is going into the hands of the cognitive elite. At the same time, we have millions of unemployed or low-paid liberal arts graduates saddled with a lifetime of debt, because they chose a major that generate as much economic value as selling ice to Eskimos, or they graduated from no-name college. Instead of conceding to the deterministic reality that not everyone is smart or mature enough to benefit from college, the left would rather blame loan companies, the rich, employers, the government, and the colleges themselves for failing to guarantee a good job for every graduate.

Economic value is created through apps, the stock market, monetary policy, job loss, STEM, creative destruction, and so on. Labor – people going to work – is occupying a smaller piece of this pie. Downward economic mobility is the new normal, but perhaps this is the optimal configuration for an economy, to have a few with everything and most with little. The good news is that while income inequality has never been higher, it’s never been easier to get rich through the three pillars of wealth creation; investing in Bay Area real estate, creating viral apps, and buying stocks. Whether it’s Facebook, Snapchat or Uber, most people who have gotten filthy rich in the past five years have done so through the acquisition of capital, not by traditional labor and wages.

According to Tyler, average is over, so being mediocre is almost no better than being bad. Just ‘getting by’ won’t work anymore. Despite record profits and earnings, employers are still in 2008-style cost cutting mode. To get hired means you have to be overqualified. A lot of Google workers report feeling bored because the work isn’t commensurate with the hiring requirements. Even to serve food at a movie theater, you have to prove to the interviewer that you will be the best food-server in the world, even though anyone with a room temperature IQ can do the job reasonably well. To work as an intern at an online media publication, you have to be more knowledgeable of your field than even most of the paid employees.

A weak GDP number and low labor force participation isn’t going to derail the the global asset inflation boom. Winners, as opposed to the doom and gloom losers, understand that these are mere blemishes on an otherwise rosy economic picture, or what we call a Goldilocks economy and greater moderation. So while the bulk of the unemployed residing on the left half of the bell curve cannot find jobs, the stock market keeps going up and profits & earning keep being blowout, which is the free market’s way of saying that those unemployed people don’t matter too much. What matters to Wall St. is not labor or GDP, but profits & earnings, exports, and consumer spending. Those keep being better than ever, despite the left’s endless incantations of doom and gloom and insistence that the consumer is supposed to be ‘maxed out’.

Due to a combination of Middle East tensions, speculation, forever low interest rates, and strong global economic growth, by 2015, we predict Dow 20,000, Facebook stock at $150, and oil at $135/barrel and gasoline at $5/gallon. Every unspent penny will be forced into circulation as living expenses keep going up, but it won’t counted as ‘official’ inflation. The cognitive elite tend to be impervious to this because they have tenure and or are beneficiaries of the asset inflation through equity and real estate. The easiest way for ordinary people to participate is to buy stocks, which is why I’ve been telling people to buy since the S&P 500 was at 1200 back in 2011 – now it’s at 1950. For $5,000, you can open a futures trading account to trade $100,000 of the S&P 500. If the market surges another 50% – which I know it will – you will make $45,000 in profit. In the smartist era of biological determinism, this is how you join the ‘new rich’. You won’t get into the top .01%, but an extra $50k or more just sitting on your butt, reaping the benefits of the fed and consumer spending sounds like a good deal to me.

Social media is changing the world, if it hasn’t already done so. The meaning of ‘economic recovery’ needs to be redefined to include activity most people wouldn’t normally associate with economics, such as posting pictures on Facebook, using Snapchat, and tweeting. These activities create as much – if not more- value than going to work, and should be included in the recovery statistics. Taking pictures or as some call ‘selfies’ does create economic value in ways that may not be obvious, but is as every bit as important as labor.

In the smartist era, being rich and or smart makes you a more valuable person. From oracles of the meritocracy; Steven Pinker – The Blank Slate, Gregory Cochran and Henry Harpending – The 10,000 Year Explosion, Richard J. Herrnstein and Charles Murray – The Bell Curve, Nicholas Wade – A Troublesome Inheritance: Genes, Race and Human History – these books, held in sacrosanct by the smartest generation, most accurately describe reality, versus the doomed alternate reality the left resides in, holding close to their heart the fading hope of liberalism and equality. Eventually the liberals will be forced, as the walls of their delusions cave in, in facing these immutable truths; that there will be winners and lots of losers, and that no amount of social policy will be able to change this, because this is the world as it is.