My focus is on economics and capital markets. In theory, politics shouldn’t factor much in my analysis.
But in reality, politics has become a major influence on markets, and I can’t afford to neglect the political dimension. I might not like it, but I can’t ignore it.
Sure, politics has always influenced markets to some extent. But today, it’s taken on whole new dimensions.
It’s not the 1990s anymore. The key issues are no longer whether the top marginal tax rate should be 36% or 39%, or if there’s too much government regulation of whatever industry. Today’s key issues are much more fundamental.
Today, many politicians can’t even agree upon what a man is or what a woman is. That would have been inconceivable until just a few years ago. Any such debate would have been a skit on Saturday Night Live as a topic so ridiculous it would never occur in real life. But today, those debates exist.
Ultimately, it comes down to culture.
As the late Andrew Breitbart said, “Politics is downstream from culture.” In other words, politics follows culture. That means that in some sense, markets ultimately follow culture.
What cultural influences are presently dominant, and where did they originate? That’s what I want to discuss today.
A World Turned Upside Down
Many investors and everyday Americans have a sense of a world turned upside down. Investment funds are organized around ESG scores (environment, social and governance) rather than performance. Admissions to schools and promotion in jobs are no longer based on merit but are based on factors such as race and ethnicity.
The administrative state (also known as the deep state) issues orders that are not supported by law and defy common sense. Government spending goes for subsidies to dead-end technologies such as electric vehicles and windmills.
Incidentally, EVs are fine if people want them, but why are they subsidized with tens of billions of dollars of taxpayer money? This list of nonsensical policies and mandates goes on.
As recently as the 1960s and 1970s, the U.S. was far down the road of racial reconciliation, technological advancement and world-class infrastructure. Some of that still exists, but much has been replaced with animosity, division and decay.
What’s at the root of this change for the worse?
A Blueprint to Undermine the U.S. From Within
I recently read one of the most fascinating political articles ever that addresses this question.
It’s a 39-year-old interview with a Soviet KGB defector to the United States named Yuri Bezmenov.
In it, he describes the psychological and propaganda techniques the KGB used (and that Chinese Communists still use today) to undermine the U.S. from within.
I found his analysis highly accurate and highly credible. He explains how controlling the meaning of words and controlling narratives can be used to undermine the beliefs that citizens have in their own society. From there, it’s all downhill for that society.
He’s not alone in his views. His analysis and prognosis are in line with George Orwell’s, author of Nineteen Eighty-Four; Aldous Huxley’s, author of Brave New World; and many others’.
One of the most prescient commentators on the decline of capitalist and democratic societies was Joseph Schumpeter. In his book Capitalism, Socialism and Democracy (1942), he predicted that capitalism would fail and be overtaken by socialism. His reason has nothing to do with a Marxian revolution. He thought that was nonsense.
Instead, capitalism would be a victim of its own success. We would become so wealthy as a society we would take prosperity for granted and forget where the wealth came from. At that point, we would move to socialism (without revolution) on the view that we could afford it.
He said the process would take 50 years. That turned out to be a highly accurate prediction.
A Rogue’s Gallery of Philosophers
The other thinkers along these lines include the post-structuralists (sometimes called postmodernists) including Jacques Derrida, Michel Foucault, Gilles Deleuze, Felix Guattari, Herbert Marcuse and others lumped into the category of deconstructionists.
That’s not a very accurate description and they’re not well understood. Interestingly, the entire French philosophy movement of the 1960s of which they were a part entered U.S. academia at a global conference hosted at Johns Hopkins University in 1966.
This article isn’t a deep dive into political theory. I won’t bore you with that, and you can do your own research if you want. It’s enough to know that these post-structuralists were philosophers who don’t get much respect in France today.
They had a bit of a movement in Germany in the 1970s, but that died out after the rampages of the far-left Baader-Meinhof gang (also known as the Red Army Faction) and the murder of German industrial magnate Hanns Martin Schleyer by the Red Army Faction in 1977.
The only place their philosophy really took off was the U.S. It did not get traction in philosophy departments. But it thrived in English departments, where it spread to primary education.
Words Have No Objective Meaning
Their main idea is that words do not have objective meanings. Words mean what those in power say they mean. Words are used to construct narratives, basically stories that define reality. The “truth” of the narrative is irrelevant. What matters is the power of the narrative to influence perception and behavior.
So those in power define words, construct narratives and control perceptions. This is the real purpose of taking over universities, foundations, media and corporations. You get to control the narrative.
All of this philosophy has its roots in the German philosophers Friedrich Nietzsche and Martin Heidegger (neither liked democracy very much). They are not to blame for the results, but they are indispensable to understanding the outcome.
The practical implications of controlling the narrative are all around us: climate alarmism, pandemic, DEI, ESG, BLM, insurrection and more.
This redefinition of words and reconstruction of culture were implemented at the elementary and secondary school levels. The program was to eliminate critical thinking, SATs and merit-based admissions. One imperative was to stop teaching history.
What’s left is an ideologically brainwashed generation (or two) who know what they have been programmed to believe but lack the ability to challenge their own views, listen to opposing views or process facts.
Of course, the original source of this program was the Italian neo-Marxist Antonio Gramsci, who many consider the founder of cultural Marxism. His Prison Notebooks (1929-1935), about 3,000 pages long, are the playbook for everything that has happened since.
So, yes, the Bezmenov interview was revealing, and he got the analysis exactly right. Yet his views should be put in the broader context outlined above.
Which brings us to today’s political scene. Trump may be vulgar and narcissistic. He’s a bit of a Nietzschean Overman with a will to power that is active, not reactive. But make no mistake, Obama was as just narcissistic as Trump, but he was highly polished so he could conceal it. Biden is also a narcissist.
But the real reason Trump is so hated is because he stands in the way of everything described above.
He is, so to speak, not with the program of the progressives and neo-Marxists. That’s why they will stop at nothing — including criminal prosecutions, dismantling his business empire and personal attacks — to stop his current advance toward the White House.
If Trump wins the White House in November 2024, as seems likely, it’ll still take 20 or 30 years to reverse the educational and intellectual damage that’s been done. After all, these ideologies began their “long march through the institutions” in the 1960s.
Today they control the media, entertainment, government bureaucracies, education — all the major institutions that govern American life. The battleground is everywhere, but primarily in elementary schools and homes.
I don’t want to sound melodramatic, but it really is a culture war. And remember, politics (and markets) is downstream from culture.