Doomsday prep for the super-rich

This article by the New Yorker is going viral: DOOMSDAY PREP FOR THE SUPER-RICH (Some of the wealthiest people in America—in Silicon Valley, New York, and beyond—are getting ready for the crackup of civilization.)

The article was shared hundreds of times on sites such as Reddit, and the same liberals who express outrage at finance and tech billionaires protecting themselves and their families during possible societal collapse have nothing to say about wealthy politicians and entertainers who also have private jets and mansions and seek to seclude and isolate themselves from society – not just during crisis but at all times.

A common argument in the comment threads is that if the rich want to protect themselves, they should spend their money revitalizing their local communities instead of hiding from them. But the wealthy pay the most in taxes (both capital gains and income) whereas the bottom 50% pay zero income taxes. The left’s anger against the wealthy is misdirected and should be directed against state and federal governments for mismanaging this money.

Regarding the article, instead of asking, ‘when will there be revolt and revolution,’ it’s better to ask, ‘why hasn’t there been?’

Civil revolt is unlikely, because history shows, as explained in earlier posts here, here and here, revolutions typically occurs when there is severe economic strife – massive unemployment, hyperinflation, starvation, etc. We’re nowhere near that. Compared to the rest of the world, Americans have it pretty good. The unemployment rate in America is only 5% (which I know does not take into account those who dropped out of the labor force), whereas in other countries, such as Greece, Brazil, Turkey, and Spain, it’s much higher. Inflation in America is only 2%, compared to much higher inflation in the aforementioned countries. And as explained in the above links, not only the the case for revolution weak, but America-politically, economically, and socially-is very stable. To get an idea of how unlikely revolution is, even in dire economic conditions, consider Zimbabwe, which not long ago had 95% unemployment and 1000% annual inflation, yet they still haven’t been able to depose Mugabe. America went through economic conditions far worse than now – the 70’s stagflation and Great Depression – without revolt or civil war occurring.

Also, America’s law enforcement, defense department, FBI, and military is extremely effective, if push comes to shove, at quelling any possible uprisings. Look at the post-911 response, in which America put its full weight behind preventing terrorism, with success, as there haven’t been any repeat attacks, and many potential attacks have been foiled. Because failed attacks get much less media coverage than successful ones, the absesne of terrorism creates the impression that all this anti-terrorism spending is ineffective, but all the work goes on behind the scenes, and it’s understandable why the FBI and other agencies don’t want to make their counter-terrorism efforts obvious to the public. This is also related to the Lucas Critique in economics–but replace ‘robbery’ with ‘terrorism’, and ‘Fort Knox’ with any major city:

For a simple example, consider the question of how much Fort Knox should spend on protection.[7] Fort Knox has never been robbed. Statistical analysis using high-level, aggregated data would therefore indicate that the probability of a robbery is independent of the resources spent on guards. The policy implication from such analysis would be to eliminate the guards and save those resources. This analysis would, however, be subject to the Lucas Critique, and the conclusion would be misleading. In order to properly analyze the trade-off between the probability of a robbery and resources spent on guards, the “deep parameters” (preferences, technology and resource constraints) that govern individual behaviour must be taken explicitly into account. In particular, criminals’ incentives to attempt to rob Fort Knox depends on the presence of the guards. In other words, with the heavy security that exists at the fort today, criminals are unlikely to attempt a robbery because they know they are unlikely to succeed. However, a change in security policy, such as eliminating the guards, would lead criminals to reappraise the costs and benefits of robbing the fort. So just because there are no robberies under the current policy does not mean this should be expected to continue under all possible policies. In order to answer the question of how much resources Fort Knox should spend on protection, the analyst must model the “deep parameters” and strive to predict what individuals will do conditional on the change in policy.

The Rodney King and Watts riots were perhaps the closest in recent years America has come to major civil unrest and ‘race war’, but those were self-contained and hardly apocalyptic. For there to be major disruption probably requires a coup of some sort whereby the military and police defy the chain of command in joining or forming an uprising. Another possibility could be an attack by a rogue state on major American cities, that isn’t thwarted by anti-missile defense systems.

Back to the original article, this is a good point:

Most people just assume improbable events don’t happen, but technical people tend to view risk very mathematically.” He continued, “The tech preppers do not necessarily think a collapse is likely. They consider it a remote event, but one with a very severe downside, so, given how much money they have, spending a fraction of their net worth to hedge against this . . . is a logical thing to do.”

If someone has a family and residence to protect, some preparation makes sense.

“I’ve heard this theme from a bunch of people,” Hoffman said. “Is the country going to turn against the wealthy? Is it going to turn against technological innovation? Is it going to turn into civil disorder?”

To answer those, no.

“But, having said that, I actually think it’s logically rational and appropriately conservative.” He noted the vulnerabilities exposed by the Russian cyberattack on the Democratic National Committee, and also by a large-scale hack on October 21st, which disrupted the Internet in North America and Western Europe. “Our food supply is dependent on G.P.S., logistics, and weather forecasting,” he said, “and those systems are generally dependent on the Internet, and the Internet is dependent on D.N.S.”—the system that manages domain names. “Go risk factor by risk factor by risk factor, acknowledging that there are many you don’t even know about, and you ask, ‘What’s the chance of this breaking in the next decade?’ Or invert it: ‘What’s the chance that nothing breaks in fifty years?’ ”

This is where the collapse argument shows weakness. If such systems are really as vulnerable as some argue they are, there would be far more disruptions by terrorists and other groups, than we’ve already seen. Those who seek the destruction of America are looking for any entry possible, so if major infrastructures are so vulnerable, why haven’t there been more attacks? If disabling major websites and services such as Google and Netflix were easy or feasible, such attackers could realize large profits by betting against the stock prices of companies adversely affected by prolonged downtime.

Élite anxiety cuts across political lines. Even financiers who supported Trump for President, hoping that he would cut taxes and regulations, have been unnerved at the ways his insurgent campaign seems to have hastened a collapse of respect for established institutions. Dugger said, “The media is under attack now. They wonder, Is the court system next? Do we go from ‘fake news’ to ‘fake evidence’? For people whose existence depends on enforceable contracts, this is life or death.”

Again, more fear and concern over nothing. Trump still plans to lower taxes and reduce regulations. In his first week, Trump ordered the revival of Keystone XL and Dakota Access pipelines. Trump rightfully going after the disingenuous MSM has nothing to do with reneging contracts between private individuals. The media is not an ‘established institution’, and many government institutions are oversized and inefficient and need to be reduced or eliminated. The left keeps getting it wrong: the fate of the US economy does not hinge on some stupid, overblown ‘trade deals’. If such deals were so important, Trump would not be able to override them with an executive order; he would need to have the approval of congress. Trump on Monday pulling out of TPP was met with indifference on Wall St., and then over the next two days the stock market rocketed 1.5% higher to new highs. Trump and his staff are not idiots and are not going to try to enact policy (assuming that is even possible) that sinks the economy and stock market, generating bad press and jeopardizing his reelection hopes.

The part about the underground bunker made from a missile silo reads like something from a sci-fi novel. The biggest challenge is probably retreating to the silo when crisis strikes, because it’s possible everything will shutdown immediately if the crisis is bad enough. You would have to permanently live within the vicinity of the silo, for maximum effectiveness.

This passage stood out:

“The country has turned into the New York area, the California area, and then everyone else is wildly different in the middle,” he said. He worries that the economy will suffer if Washington scrambles to fund Social Security and Medicare for people who need it. “Do you default on that obligation? Or do you print more money to give to them? What does that do to the value of the dollar? It’s not a next-year problem, but it’s not fifty years away, either.”

A single large bailout would probably be required to cover the cost of buying out all existing payees. People aren’t going to revolt if social security goes away–they will revolt it they paid in for many years and get nothing.

Overall, I reiterate there won’t be any sort of crisis or revolt in America during Trump’s presidency and possible reelection, if not for decades or longer. Firearms and emergency rations are a good idea for general self-defense and preparedness regardless if there is a major crisis or not.