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The Gap Between Rich and Poor Is…Narrowing!

April 30, 2000 By Mark Skousen Leave a Comment

Personal Snapshots
FORECASTS & STRATEGIES
April 2000

by Mark Skousen

“The poor remain poor and the command of income by those in the top income brackets is increasing egregiously.” — John Kenneth Galbraith

“The poor have not gotten poorer. The average family below the poverty line today is doing as well or better than middle-class families in 1971.” — W. Michael Cox and Richard Alm

Recently two Washington, D.C., think tanks warned that the income gap between rich and poor was getting worse, much worse. They blamed differences in education and skills, immigration, and the stock market boom. To remedy this injustice, they urged increasing the minimum wage and unemployment insurance while reducing “regressive” taxes.

I strongly disagree with these findings for several reasons. First, these studies ignore the fact that families and individuals move from poor to middle class, and middle class to rich over time. For example, a report by the Federal Reserve Bank of Dallas indicates that 29% of poor families in 1975 had moved to the top income brackets in 1991. Only 5.1% of those in the bottom in 1975 remained at the bottom in 1991! In a dynamic market economy, there is constant upward mobility.

Second, other more in-depth studies demonstrate that the poor have improved their material condition tremendously during the 20th century and even the past 20 years.

The above chart shows the benefit of looking specifically at examples of living standards instead of relying on income figures. The overwhelming fact is that if we measure standard of living by the quantity, quality and variety of goods and services, we see that our material lives have improved dramatically and profoundly over the past 100 years, for peoples of all incomes. The rich have gotten richer, but so have the poor.

The Rich Aren’t So Different After All

I would go one step further and argue that the poor have actually advanced the most in this country and are gradually and sometimes speedily catching up with the rich. The rich are having a harder time distinguishing themselves from the poor. The rich have cars with air-conditioning and radios, and so do most of the poor. The rich watch the World Series (or an opera) on their big color TVs, and so do the poor. The rich jump on a jet and fly to exotic lands and, with recent cheap excursion fares on the Internet, the poor are doing the same thing. In fact, the Internet is the great leveler. It’s so cheap today that anyone can get online and obtain information with hardly any cost at all. The Internet is increasing dramatically the level of competition and thereby reducing the cost of living. For example, it won’t be long before long-distance telephone calls will cost nothing. What was once the domain of the well-to-do is now open to every one. Compared to yesteryear, every house today is a castle, every man a king.

Yes, The Rich Are Different — They’re Better

March 5, 2000 By Mark Skousen Leave a Comment

Personal Snapshots
Forecasts & Strategies
March 2000

by Mark Skousen

“The rich are different from you and me.” — F. Scott Fitzgerald

“Yes, they have more money.” — Ernest Hemingway

In 1996 when I jogged with President Clinton (see My Jog with Bill Clinton), I complained about his constant attacks on the wealthy. During the presidential campaigns, he would often opine, “The rich don’t pay their fair share of taxes.” Politicians and the media love to take potshots at the well-to-do. Hollywood producers delight in portraying the rich as big spenders who use drugs, engage in white-collar crime, avoid taxes, and dump their companions in favor of trophy wives.

Millionaires Are Model Citizens!

Thomas J. Stanley, former professor of marketing at Georgia State University, shows that the critics of capitalism are dead wrong. Prof. Stanley, you may recall, is the author of the huge best seller, The Millionaire Next Door, which I reviewed last May in Forecasts & Strategies. Now he has a new book out, and it’s a blockbuster. According to The Millionaire Mind, (available from www.amazon.com or Laissez Faire Books www.lfb.org) millionaires are model citizens. Here are the results of his survey of over 1,000 super-millionaires (people who earn $1,000,000 a year or more):

They live far below their means, and have little or no debt. Most pay off their credit cards every month; 40% have no home mortgage at all.
Millionaires are frugal; they prepare shopping lists, resole their shoes, and save a lot of money; but they are not misers; they live balanced lives.
97% are homeowners; they tend to live in fine homes in older neighborhoods. (Only 27% have ever built their “dreamhome.”)
92% are married; only 2% are currently divorced. Millionaire couples have less than one-third the divorce rate of non-millionaire couples. The typical couple in the millionaire group has been married for 28 years, and has three children. Nearly 50% of the wives of the super-rich do not work outside the home.
Most are one-generation millionaires who became wealthy as business owners or executives; most did not inherit their wealth.
Almost all are well educated; 90% are college graduates, and 52% hold advanced degrees; however, few graduated top of their class — most were “B” students. They learned two lessons from college: discipline and tenacity.
Most live balanced lives; they are not workaholics; 93% listed socialiazing with family members as their #1 activity; 45% play golf. (Stanley didn’t survey whether they were avid book readers — too bad.)
52% attend church at least once a month; 37% consider themselves very religious.
They share five basic ingredients to success: integrity, discipline, social skills, a supportive spouse, and hard work.
They contribute heavily to charity, church and community activities (64%).
Their #1 worry: taxes! Their average annual federal tax bill: $300,000. The top 1/10 of 1% of U.S. income earners pays 14.7% of all income taxes collected!
“Not one millionaire had anything nice to say about gambling.” Okay, but his survey also showed that 33% played the lottery at least once during the year!

Thus, we see how the super upper-income families of this nation are not the ones contributing to crime, welfare, divorce, child abuse, and a spendthrift society. But they are playing a lot of taxes and making a lot of contributions to solve these social problems.

Although Stanley did not cover this issue, I’ve also seen studies indicating that higher-income individuals live longer, on average five to ten years longer, than the average American (76 years) and enjoy better health, fitness and quality of life. They aren’t the ones causing Medicare to go bankrupt.

Instead of bashing the rich, let’s salute them. If indeed the wealthy are such good citizens, as Stanley’s work suggests, our goal should not aim to impoverish the rich, but the enrich the poor. That our goal at Forecasts & Strategies.

Greed is Good — NOT!

February 5, 2000 By Mark Skousen Leave a Comment

Personal Snapshots
Forecasts & Strategies
February 2000

by Mark Skousen

“Unbridled avarice is not in the least the equivalent of capitalism, still less its ‘spirit.'” — Max Weber

Recently I heard free-market economist Walter Williams speak at a local college about capitalism. He quoted approvingly from Gordon Gekko, the fictional character of the film Wall Street, “Greed is good.”

I normally agree with most everything Walter Williams says, but not this statement. Too often, defenders of capitalism go overboard in defending pejorative phrases, such as “greed is good” or, in the case of Ayn Rand, her book title The Virtue of Selfishness. But selfishness is not a virtue, nor is greed, whether in business or finance. Selfishness leads to unethical behavior — deceptive advertising, fraud, and even theft. It often means taking advantage of another person. Greed and selfishness could land you in jail.

Adam Smith’s Model of Enlightened Self-Interest

Adam Smith, the father of free-market capitalism, did not write approvingly of selfishness or greed. He favored enlightened self-interest and industriousness. He believed that his “system of natural liberty,” his phrase for capitalism, would actually reduce greed, selfishness and fraud. Commercial society, he said, encourages people to be educated and industrious. It “cultivates patience, industry, fortitude and application of thought.” The fear of losing customers “restrains his frauds and corrects his negligence,” Adam Smith wrote in The Wealth of Nations. In contrast to political societies, which depend on flattery, favoritism and deceit, capitalist societies foster self-control, cooperation, punctuality, benevolence and deferred gratification.

Financial Advice: Don’t Get Greedy!

In the financial field, we know that the two greatest enemies to profits are fear and greed. Contrarians take advantage of inexperienced investors who panic when prices are dropping and often sell out in desperation at the bottom. Unseasoned investors also tend to buy heavily at the top, only to see their investments disappear. In short, greed is a disaster for investors. This is a vital lesson given the high-wire act Wall Street is following these days, especially with regard to Internet stocks.

The Real Significance of the Millennium

A friend of mine wrote me saying that the year 2000 was no big deal, and this new millennium was nothing unusual in terms of other calendars: For Moslems, it was 1420, for Jews it was 5760, for Buddhists it was 5119, etc. Well, he’s wrong. There is no universal celebration of the Moslem, Jewish or Buddhist calendar, yet on New Year’s Eve, what did we witness on television? Magnificent celebrations across the globe even in China, Israel, Africa and other places that are not Christian. Why? Western capitalism, which uses the Christian calendar, has captured the world — in business, in dress, in culture.

What Are the Bears Missing?

January 31, 2000 By Mark Skousen Leave a Comment

Forecasts & Strategies
Personal Snapshots
January 2000

What Are the Bears Missing?
By Mark Skousen

“He has been wrong about the stock market for a decade, he said, because he is a contrarian.” — The New York Times, December 26, 1999

The 1990s has turned out to be the best-performing decade of the 20th century in terms of stock market performance. Several new factors palyed a role: Unexpected low commodity and consumer inflation, fiscal restraint, increased productivity, globalization and the collapse of the Soviet communism and the socialist model of central planning.

And yet, an incredible number of bright people missed the entire bull market. Year after year, they predicted the imminent collapse in stocks, yet the Dow increased three fold and the NASDAQ 10-fold. The New York Times named names: James Grant, Marc Faber, and more recently Barton Biggs. All Ivy League graduates. Many of my gold bug friends missed the bull market, too.

How is this possible? What kind of prejudices would keep an intelligent analyst from issing an overwhlming trend?

Confessions of a Gold Bug Technician

A good friend of mine is a technical analyst who searches the movement of prices, volume, and other technical indicators to determine the direction of stocks and commodities. Most financial technicians are free of prejudices and will invest their money wherever they see a positive upward trend and avoid or sell short markets that are seen in a downward trend. But my friend is a gold bug and no matter what the charts show, he somehow interprest these charts to suggest that ogld is ready to reverse its down ward trend and head back up. Equally, he always seems to think the stock market has peaked and is headed south. As a result, throughout the entire 1990s, he missed out on the great bull market on Wall Street and lost his shirt chasing gold stocks.

Another friend uses an old-style Dow theory that requres both the Dow Industrials and the Dow Transports to hit new highs before a bull is declared. Durring the 1990s, this Dow theorist had the bear in the box more than the bull.

Over the years, I’ve encountered three kinds of investment analysts: Those who are always bullish, those who are always bearish, and those whose outlook depends on market conditions. I’ve found that the third types, the most flexible, are the most successful on Wall Street.

“What Am I Missing?”

In the financial business, the key to success is a willingness to chage your mind when you’re wrong. Stubbornness can be financially ruinous. When a market goes against you, you should always ask, “What am I missing?”

Sound “Austrian” economics has taught me two principles that can be applied to this situations. First, marginal changes in the political or economic landscape can make big differences in the markets. Economists always talk about marginal analysis. Thus, marginal tax cuts, reducing the size of government, and minimizing trade barriers can turn a bear market into a roaring bull market.

Second, beware historical data. History does not repeat itself in every cycle. It does make a difference who is president, or what the new technology is.

“The bears are transfixed by historical data,” reports The New York Times. Indeed, in bull versus bear debates over the past 10 years, the bears have always brought up the fact that stocks are vastly overvalued “on an historical basis.” No argument there! But does that mean we must be bearish? Again, we must ask ourselves the all important question, “What am I missing?” The markets have been overvalued for years — but they keep going up because of new net benefits to the economy. This is data that is not part of the past.

GUESS WHO?

September 5, 1999 By Mark Skousen Leave a Comment

Forecasts & Strategies Personal Snapshots

by Mark Skousen

Which famous economist endorses the deficit-spending actions the federal government took during the Great Depression, prefers John Maynard Keynes over Austrian School economist Ludwig von Mises, recommends printing more money as a short-term solution to Japan’s problems, and is strongly opposed to the gold standard? Paul Samuelson? John Kenneth Galbraith? Paul Krugman?

No, believe it or not, it’s Milton Friedman, the Nobel Prize winning “free-market” economist!

Now, I have a lot of respect and admiration for Milton Friedman, the winner of the Nobel Prize for Economics in 1976. For the most part, he is a tireless and eloquent advocate of economic and political liberty. I consider him a good friend.

His magnificent Monetary History of the United States demonstrated conclusively that government bungling, not free enterprise, caused the Great Depression. I highly recommend his books, Capitalism and Freedom and Free to Choose (available through Laissez Faire Books, 800/326-0996).

However, most of us were pretty shocked at the New Orleans conference when Friedman answered my question, “Who is the greater economist, Ludwig von Mises or John Maynard Keynes?” He did not hesitate: “Keynes!”

Friedman has written elsewhere that he regards Keynes as a brilliant economist who contributed much to the profession. He even defends deficit spending, Keynes’s cure for the Great Depression, while attacking Mises’s and Friedrich Hayek’s “non interventionist” approach during the 1930s. Friedman is a critic of the Austrian theory of the business cycle and personally considers Mises “intolerant” and “fanatic” (though he does not feel that way about Hayek).

Does this mean that Friedman, the famed free-market economist, is a closet Keynesian? Frankly, I’m mystified by Friedman’s favorable comments about John Maynard Keynes. The British economist was the prime mover behind the thesis that the free market is inherently unstable and that big government is necessary to stabilize the economy. Keynes was a sharp critic of classical economics–balanced budgets, laissez faire government, the gold standard and the virtue of thrift—and advocated deficit spending, progressive taxation, fiat money and the “socialization of investment.” Lately Friedman, like Keynes, has advocated an activist monetary policy, that Japan should “print more money” as a short-term solution to its problems. Say again? Printing more money is what caused the economic crisis in Japan and Southeast Asia in the first place. What about tax cuts, deregulation of the banking industry, and other “supply side” solutions? He advocates them too, but not as forcefully.

Like Keynes, Friedman is also anti-gold. He prefers paper money without any backing. I’ve had numerous discussions with Friedman on this vital issue. At New Orleans, he told me he can’t understand the ideology of gold and why gold bugs are so passionate about the gold standard.

“Because it’s honest money,” I explained. I pointed out that under the classic gold standard, the U.S. Treasury backed up every U.S. $20 gold certificate with a $20 gold coin. Hence, if the government wanted to issue another $20 banknote, it had to mint another gold coin–at considerable expense. But today there is no backing and the government can print all the currency it wishes for only 3 cents per banknote. As a result, Washington can depreciate the value of its currency at will.

That’s where Ludwig von Mises comes in. The great Austrian economist demonstrated that monetary inflation is beneficial only in the short run, and that it causes a boom/bust cycle that eventually destroys the assets and savings of its citizens.

Near the end of his talk in New Orleans, Milton Friedman said that despite the academic victory of liberty, “government has become larger and more intrusive since the collapse of the Berlin Wall.” And who is the father of big government? Keynes! Who favors smaller government? Mises. In my judgment, a hundred years from now, Mises will be a major figure in all the economics textbooks, and Keynes will be a mere foot-note.

For an introduction to Mises and Austrian economics, get a copy of Planning for Freedom, 4th edition, which contains “The Essential Von Mises,” by Murray Rothbard (available for $9.95 from Laissez Faire Books, 800/326-0996). You might also find my booklet, Austrian Economics for Investors: Ludwig von Mises Goes to Wall Street, ($9.95 from Laissez Faire Books, 800/326-0996 to be helpful.

$16 BILLION DOWN THE DRAIN

Is the drug war worth it? More than 11,000 American inspectors, agents and other officials are deployed along the Mexican border. In 1996 (latest figures) there were 254 million crossings by people, including 75 million cars and 3.5 million trucks and railway cars entering the U.S. Last year the U.S. border inspectors searched slightly more than a million trucks and cars, and guess how many cocaine busts they made? Six! Gen. McCaffrey, the White House director of drug control policy, called the figure “dispiriting.” I’d call it a “bust.” Clearly the benefit doesn’t meet the cost ($16 billion a year in budget funds). (Source: New York Times Sept. 20, 1998)

Las Vegas: America’s Playground

July 28, 1999 By Mark Skousen Leave a Comment

Forecasts & Strategies
Personal Snapshots

by Mark Skousen

“Americans are, above all, a problem-solving people.”
–Paul Johnson, A History of the American People

The transformation of Las Vegas is a perfect example of why the United States of America is still the greatest country in the world. After World War II, developers created in the middle of the Nevada desert a sleazy, tacky town devoted to gambling, shows and sex. But in the past few years, entrepreneurs have created a brand-new Vegas.

Last month, I spent two fun-filled days at the Mirage Resort without gambling. The new Las Vegas offers a wide variety of services for the non-gambler: sports and swimming facilities, great restaurants and buffets, giant IMAX theatres, excellent golf courses, Wet’n Wild water theme park, several spectacular roller-coaster rides, shopping malls (including the sumptuous Forum Shops next to Caesar’s Palace), and a myriad of other forms of entertainment. As a result, Las Vegas is becoming America’s playground.

Another example of urban renewal is New York’s Times Square and 42nd Street. corporations such as Walt Disney have joined with the city to tear down the seedy side of Times Square and re-create a safe environment for local New Yorkers and tourists.

I’m reminded of one other example: Chicago’s Rush Street used to be a crime-infested section of town. Over the past few years, the city fathers have cleaned up the district, and now it’s a hot spot for night life for young people and college students.

PAUL JOHNSON’S NEW BOOK ON AMERICA

The eminent British historian Paul Johnson says, “Americans are, above all, a problem-solving people.” The transformation of Las Vegas, New York’s Times Sauare and Chicago’s Rush Street proves it. It’s our nature to solve problems. Under Reagan, U.S. fought to reduce interest rates, inflation and marginal tax rates.

Under Clinton, the deficit has come down, welfare has been reformed, and crime fallen. And much more can be done. As Johnson states, Americans “will attack again and again the ills in their society, until they are overcome or at least substantial redressed.”

If you want to read an upbeat, one-volume history of the U.S., there is no better source than Paul Johnson’s new book, A History of the American People ($35 or less, available at all major bookstores, on the Internet at www.Amazon.com or through Laissez Faire Books, 800/326-0996). It is a sheer delight to read. Johnson does not hide his admiration, his “labor of love,” of this “most remarkable people,” “this greatest of human adventures,” and this “human achievement without parallel”–the United States of America.

This one-volume history is fresh and exciting to read, not the stale history you may have read when you were a student. Johnson covers material not normally found in the history books, such as the impact of religion and art on American life. Johnson makes you proud of being an American again.

Johnson says, regarding the history of America, “We need to retell it.” Equally, we Americans need to reread it!

Who is the Greatest Economist of the 20th Century?

February 5, 1999 By Mark Skousen 2 Comments

WHO IS THE GREATEST ECONOMIST OF THE 20TH CENTURY?

“But half a century later, it is Keynes who has been toppled and (_________________), the fierce advocate of free markets, who is preeminent.” –Daniel Yergin and Joseph Stanislaw, The Commanding Heights, p. 15.

Who deserves to be the greatest economist of the 20th century? This question was debated at my session of the annual American Economic Association meetings in New York City last month. We polled the audience of about 150 economists, and John Maynard Keynes won. Keynes revolutionized the economics profession by contending that the free-market economy is inherently unstable and requires government intervention (through deficit spending, progressive taxation and monetary inflation) to keep it on the path of full employment.

Of course, the audience may have been biased since the topic of the session was on Keynes’s most famous proponent, Paul A. Samuelson. Still, Keynesian economics–the economics of government interventionism at the macro level–is very much alive, and therefore, Keynes must be regarded as the most influential economist of the 20th century.

FRIEDMAN’S COUNTERREVOLUTION

However, influence is not the same as greatness. Milton Friedman came in second in the informal poll and in terms of greatness, he exceeds Keynes. Time magazine’s editor-in-chief, Norman Pearlstine, gives the nod to Friedman as the “economist of the century” (Time, December 7, 1998). And in a recent study of living economists most frequently cited in college textbooks, Milton Friedman came in #1 by a landslide. He was cited in all the textbooks. (Paul Samuelson came in a distant #12.) Friedman’s contributions are many: He demonstrated that government, not free enterprise, caused the Great Depression (through a disastrous monetary policy); he showed that monetary policy was more powerful than fiscal policy; he made the case against progressive taxation, deficit spending and monetary inflation. He won the Nobel Prize in 1976 for these efforts. His best books are Capitalism and Freedom and Free to Choose (both still in print, available through Laissez Faire Books, 800/326-0996).

Sharing the Prize

Milton Friedman should also share the prize of greatest economist with Friedrich A. Hayek, the Austrian who studied under Ludwig von Mises. As Yergin notes in The Commanding Heights (quoted above), Hayek made a convincing case against socialist central planning in The Road to Serfdom and other anti-socialist works. He developed a powerful tool for explaining business cycles, known as Austrian capital theory. His theory of knowledge and entrepreneurship is vital in today’s global economy. He rightly won the Nobel Prize in 1974.

So my vote goes to both Friedman and Hayek.

WHO DO YOU CONSIDER THE GREATEST INVESTOR?

As we approach the end of the 20th century, scholars are compiling lists of the greatest writers, politicians, entrepreneurs and scientists of this remarkable century.

I know who gets my vote for greatest investor: Warren Buffett. Not only has he consistently beaten the market, but his optimism about America has paid off handsomely. Too bad he doesn’t own any Internet stocks. He could have been the world’s first trillionaire!

R.I.P., THE SUPERBOWL INDICATOR

I bid a fond farewell to the Superbowl Indicator. Every so often, market players get caught up in an irrational indicator that allegedly makes it easy to predict the markets. In the 1970s it was the soybean-silver ratio. In the 1980s it was the Kondratieff Cycle. And in the 1990s it was the Superbowl Indicator. Supposedly, if the National Football Conference (NFC) won the Superbowl, stocks would rise; if the American Football Conference (AFC) won, stocks would fall. Amazingly, this indicator worked for decades. Throughout the 1990s, the NFC team won and the stock market rose. Then last year the Denver Broncos of the AFC won, and many stock market pundits exited the market or sold short. Big mistake–the S&P 500 rose 28% in 1998! And thus ended once and for all the Superbowl Indicator. Good riddance, and may it be replaced by sound strategies based on free-market economics!

Darwin on Wall Street

August 31, 1998 By Mark Skousen Leave a Comment

Darwin on Wall Street
Mark Skousen
Forecasts & Strategies August 1998

“No other theory or concept ever imagined by man can equal in boldness and audacity this claim — that everything revolves around human existence — that all the starry heavens, that every species of life, that every characteristic of reality exists for mankind and for mankind along. It is simply the most daring idea ever proposed.”
— Michael Denton, Nature’s Destiny

I can’t think of a more depressing philosophy than that of Darwinian evolution as expressed by apologists Stephen J. Gould and Richard Dawkins.

According to them, life is a mindless perpetuation of the species, without meaning or design, just natural selection and survival of the fittest.

Man is nothing special. The creation of life did not have man in mind. Man is accidental and random, a descendant of “punctuated equilibrium.” There’s no God, no special creator, no life after death, no spiritual existence at all. There’s no beauty in life — it’s all random matter. There’s no free will, only material determinism.

It’s all in the genes, didn’t you know?

Not surprisingly, Darwin suffered from this blead outlook on life and was terribly unhappy at the end of his life. Prior to writing The Origin of Species, he delighted in reading poetry and Shakespeare, and listening to music.

Afterwards, however, he lost all interest. “But now for many years, I cannot endure to read a line of poetry: I have tried lately to read Shakespeare, and found it so intolerably dull that it nauseated me. I have also almost lost any taste for pictures or music.” (The Autobiography of Charles Darwin, pp. 138-139)

The evolutionist view is pervasive; we even see it in economics and the financial world. “Today’s economy is a dog-eat-dog world; it’s a jungle out there, and only the fittest survive; the big corporations gobble up the weak competition.”

Economic Darwinism ignores the cooperative side of the economy, and the ability of weaker participants to survive and even thrive.

In the financial field, the efficient market theorists proudly declare: “The markets are random and unpredictable. You can’t beat the market, so why try?” Their investment technique is pretty boring stuff: Buy index funds, never trade, just buy and hold until retirement. It’s like watching paint dry.

A Better Alternative: Intelligent Design

Fortunately, there’s an alternative to Darwinian philosophy called “intelligent design,” and there’s growing support for this more upbeat theory of life, even among evolutionists.

One of the most fascinating books I’ve read recently is Nature’s Destiny: How the Laws of Biology Reveal Purpose in the Universe, by Michael J. Denton (Free Press, $27.50, buy at a discount through www.amazon.com).

Denton is a biologist at the University of Otago in New Zealand. He joins forces with the physicists who have demonstrated how the planet is uniquely formed to sustain life.

Moreover, Denton concludes, “the cosmos is uniquely fit for only one type of advanced intelligent life — Homo sapiens.” He demonstrates, for example, how the earth’s size and atmosphere are fit both for our size and dimension.

He writes eloquently about the unique features of man compared to other animals — our superior intelligence, vision, linguistic ability, and most interestingly, the dexterity of the hand. (A chimp can’t peel an apple, tie a knot, use a typewriter or thread a needle.)

Denton also points out how man is just the right size to handle fire. He also has an engaging chapter on water, and why humans and life in general couldn’t exist without it.

In one of his great books, Human Action (hardcover, $49.95, paperback, $24.95 available at www.lfb.org), the Austrian economist Ludwig von Mises asserted correctly that man alsways acts purposefully and with design.

Human beings think, adopt values, make choices, are conscious, make mistakes and learn from experience. In the financial markets, humans invest with a specific purpose in mind, whether to earn income, make a capital gain or hedge their portfolio. Thus, all movements in stock prices are purposeful, and never random.

In sum, Darwinian evolution as a philosophy is an empty black box. It’s time sciencists and social thinkers look to “intelligent design” as a more consistent and more fulfilling concept of life.

Forecasts & Strategies
August 1998 issue