Editor’s note: In yesterday’s Dispatch, we spoke to Casey Research founder Doug Casey about his outlook on green energy, and how endless bureaucracy and government “funny money” are destroying the sector.
Today, we continue our Conversations With Casey, as Doug explains the threat of the scientific technological elite amid a growing tech bubble.
Read on to hear why this problem isn’t going away, and why he “wouldn’t touch tech stocks with a 10-foot pole”…
Daily Dispatch: Now that we’ve come full circle back to technology, we’d like your take on something that President Dwight D. Eisenhower said in his farewell address in 1960. Most people remember his warning about the “military-industrial complex.”
But he gave another warning, too, about how the “public policy could itself become the captive of a scientific technological elite.” What did he mean by that?
Doug Casey: Yes, that was a wonderful speech. He made two points that people have forgotten. Everyone knows and quotes his sage comments on the military-industrial complex. Those were spot on.
But nobody mentions the point he made about the threat of the “scientific technological elite.” Eisenhower points out, quite correctly, that it was no longer a question of a genius working solo in his laboratory to make discoveries.
Even in his day, which is to say over 60 years ago, there was a huge amount of government money flowing into science and technology. Now it’s almost all government money, directly or indirectly.
Eisenhower was quite concerned about the effects of government money, especially through the universities. It’s turned a whole class of what were once individual entrepreneurs into de facto government employees. Government money in science and technology has corrupted incentives.
Daily Dispatch: He went even further than that, didn’t he?
Doug Casey: He pointed out in his speech that before World War II, there actually was no military/industrial/scientific/academic complex. It didn’t exist. Nor did a significant standing army. Neither were there so-called “defense” companies.
There were companies that, if the government wanted airplanes, would turn their attention to making airplanes. If the government wanted tanks, General Motors would turn its attention to making tanks. But there were no dedicated defense companies. In other words, as Randolph Bourne said, about the time of World War I, “War is the health of the state.”
This is why World War II wasn’t just a catastrophe because of the killing of scores of millions of people, and the destruction of huge amounts of capital. The war actually changed the nature of the way government works – permanently. It institutionalized waste, corruption, and stupidity.
Before World War II, there was no defense establishment. It simply didn’t exist. There was no science, technology or academic establishment funded by the government – it didn’t exist. Those are the real points that Eisenhower is making in that speech.
Daily Dispatch: And it’s not just the military side of things. It’s every aspect of technology that has an involvement by government in policy.
Doug Casey: That’s right. In a larger sense, the problem is that capital is no longer directed someplace because it makes scientific, technological sense or economic sense. It’s directed there because it makes political sense.
Because it benefits the people that run the State, their constituents, and their cronies. That’s the problem. And the problem is not going to go away.
Daily Dispatch: Right, so that brings us to the final part of our conversation: tech stocks. Money has poured and continues to pour into tech stocks. According to a recent report, Google, Apple, Microsoft, Amazon, and Facebook now make up around 18% to 20% of the capitalization of the S&P 500. Is there anything that you, or anyone, can or should read into that?
Doug Casey: The stock market has been floating on a sea of funny money emanating out of the Federal Reserve since the bottom in 2008. It’s now a completely artificial market in many ways. It’s supported by money printing, and it’s going to end badly. People speculating in the market now are like kids picking up seashells when the tide has gone out just before a tsunami.
One reason these companies have become so big is because the state has been involved with them almost from the beginning, treating them like a partner, or a subsidiary, for many years. The fact that they’re so big means that they’re unwieldy. The bigger something gets, the less efficient it gets and generally, the more corrupt.
Daily Dispatch: So you wouldn’t buy them?
Doug Casey: I wouldn’t touch any of them with a 10-foot pole. You expect them all to double or triple? If they keep expanding at the rate they are, pretty soon they’re not going to only own everything on earth, they’re going to own everything in the solar system besides.
These companies are the equivalent of General Motors and General Electric when they were at their peak. Everybody knew they existed, and knew they had great track records. But that’s not when you buy them. That’s when you sell them, and look for something younger and smaller, that’s still got room to grow.
One of the oldest rules of investing is “high tech, big wreck.” But if you must invest in tech companies, I suggest get into small companies that are run by the original scientifically oriented entrepreneurs that are big shareholders. They have a lot of upside, and a lot of the vigor that comes with being a small expanding company.
But now isn’t the time to do it. We’re in bubble territory.
Daily Dispatch: You’re not against technology, you just believe the market for tech stocks is a bubble – like 2000?
Doug Casey: Despite the fact that I believe that Ray Kurzweil is right about the “Singularity,” or something like it, occurring in the next 20 to 30 years, and despite the fact technology is likely to keep expanding at the rate of Moore’s law, now isn’t a good time to invest in tech stocks. The market for tech stocks looks like that in 2000, or 1968. Both times the market for hot tech stocks melted down 90%. The market is up primarily because tons of money is being created right now.
It’s being created even now, as we speak. A new round of so-called “quantitative easing” is going on, and a lot of capital is being misallocated because of the ultra-low interest rates. These things make people think they can afford things that they really can’t. I don’t want to take part in the tech boom by being a trend follower. I’m much more interested in buying things that are demonstrably cheap.
Daily Dispatch: Such as?
Doug Casey: Right now, cyclically, commodities are ultra cheap. Later on when there’s a bubble in commodities, tech stocks will be much cheaper. You can buy them then. Apple and Facebook and whatever will probably be a fraction of current prices.
When the upcoming bear market hits, people aren’t going to care about the stock market. It’ll just be a bad memory. In fact, most of them will forget the stock market even exists. Just the opposite of what we have today, when everybody thinks they have to be in the stock market.
Remember, this has happened before. It happened in the late 1920s, it happened in the late 1960s, it happened in the late 1990s. Everything is cyclical – especially the stock market.
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A government of the government, by the government and for the government.
Before World War II, there was no defense establishment. It simply didn’t exist. There was no science, technology or academic establishment funded by the government – it didn’t exist.
Who writes shit like this?
He could have written the whole thing in two lines.
He really should have donated to the platform if he wanted any of us to pay honest attention.
(Waves at Doug Casey from the Boonies!)
Maggie.
Exactly. I waste time reading his articles, I just look at the names in the replies to decide if it’s worth looking at. Good point abuout Brutus btw.
I like the Anti-Federalist’s essays as well and if they had not been willing to be part of the debate, there would not have been a need for a Bill of Rights.
Though not as skillfully composed, perhaps, they are integral to understanding the fears of the recently en-liberated and empowered citizenry of a New Country on a New Continent.
The Anti-Federalist is half of the debate in which The Bill of Rights was the answer.
Flea…
The only place I’ve read anything from him is here. I don’t read most of them. He just peddles around a topic like the MIC and tech companies on training wheels…the two fine quotes by MG make my point.
Kurzweil and singularity, AI ………hell, it’s G.R.A.I.N. technologies and all this guy sees is the mammon….
annuit coeptis novus ordo seclorum <—-==
Ordo.
Is Grain Tech a leading statement? I’ll bite, what is it?
anonII….
I first heard it as ‘grin’; genetics, robotics, (artificial)intelligence, and nano technology…..(Tom Horn talk from a few years back entitled ‘pandemonium’s engine, I think). I just use ‘grain’ for the same thing….
annuit coeptis novus ordo seclorum <<——==
Here is another impact not mentioned of “gov’t funded” institutions (in quotes because the gov’t doesn’t HAVE any money except that taken through taxes from productive citizens/businesses). Having worked at one of the national labs (after being in industry for 25 yrs or so), they hire “only the best and brightest” from the nations’ graduate schools in engineering and the sciences. I’d say this IS true-I worked with some really intelligent, CREATIVE individuals. Now, what if those people had spent their careers in the private sector instead, starting businesses, creating products for others to buy, contributing to the nation’s prosperity, instead of being sucked into the national lab system, where MOST of their creativity never saw the light of day? Yes, cybersecurity, supercomputing, bioweapon sensors, even building a “better” bomb (sort of sarcasm there) have their places in today’s world, but it is a shame to see so many really intelligent, creative individuals not being able to contribute to the private sector. Another impact of hiring them right out of grad school is that they NEVER spend any time in the private sector, taking advantage of the learnings (best practices) that occur by people moving from company to company throughout their careers. Since they were the “best and the brightest” (a fatal hubris, I believe), they didn’t bother staying abreast of what industry had been learning. It was sad and frustrating to see this.
So many good points there, Dinky. (I know… probably D in Colorado, but I like Dinky)
My son and I had a really good visit (he called it an interrogation and told me to stop it with the Orwellian dialectic. Brat.)
So, he helped me get a better understanding of a few concepts I’d not bothered to “review” in light of new technology.
He said the majority of the software engineers seem to come from families like my friend in Maryland… well-connected families with the influence to get their kids into positions or internships to leverage them into a position with a company large enough to get them trained to do the sort of projects the company bids and wins regularly with the Federal Government and other corporate entities working with sensitive medical and personal data.
So, he slipped through the crack because I ended up at basic training August 13, 1984 instead of August 12, as originally scheduled.
Life is full of coincidences and many of them revolve around the number 13.
It is a catastrophe to let all these brilliant young thinkers be corralled into cubicle world, turned into mean bean machine coders working for the evil Dr. Robotnik.
Oh, my son took me to Sonic for Valentine’s Day. I paid. I got to look at the world through my son’s eyes. That was quite a gift.
Clever child, clever child… Dinky is ok; I’ve been called worse, I suppose. (ok if I return the favor with Naggie? I worked with a Nagy, once, but no Naggies.)
Intended or not, it is a shame that so many get funneled into the gov’t / gov’t contractor / military pipelines in life. Some of it seems to be necessary, but it creates an unhealthy dependence on the gov’t and totally distorts the free market job/career forces. Another aside – I’ve considered it wrong for gov’t spending to be a part of GDP – the gov’t doesn’t actually produce anything! It just TAKES from the productive part of society and re-distributes to those supporting the MIC.
🙂 on good time spent with your son. Ohhhh, Sonic! – the nearest one is 30 miles away. Middle of nowhere is great for peace and quiet and solitude, but there are SOME things that would be nice to have closer, like maybe stores. Tradeoffs.. The deer that mosey through are good to have around, and worth most of the tradeoffs.
You’re probably seen this, but it is always worth the chuckle. I’m sure you can relate to it.
Since nobody here reads Doug Casey (send Admin a donation Doug and I’ll say nice things!)
I will tell you a story about my Aspergers*-afflicted kid I’ve not even told before. Well, not here. And if I did, you didn’t see it.
So, he goes to work for this big Medical Data Services company and has all these double-dog secret clearances that are “contract-specific” which means the company has paid the appropriate agencies the “fee” to get his clearance upgraded on-the-fucking-spot as needed “for contract purpose.”
He doesn’t know what he’s cleared for but he knows he’s not allowed to tell me.
He told me, and I will try to quote the little snot…”Mom, you act as if people actually want to be in charge of their own thoughts. They don’t. And people who don’t even recognize they are so easily controlled just need to shut up.”
Am I wrong in thinking he sounds a little arrogant? Well? That’s just how they all are now… get over it.
Oh, boy, oh, boy. To be so young and to have it figured out like that. Arrogant? Maybe not. If he really does have AS, then he probably just is real honest and open with how he feels about things. And, he sounds kinda intelligent along with that. One of my bosses at Intel, during our 1:1’s, would just rock back and forth in his chair as we were talking. It was just what he did. Intelligent; just found a highly technical niche in life that worked for him. Hopefully your son has found a niche where he can continue to be successful. People are ALL weird in some way or another. It’s just in recent decades that society has been putting us in all these little boxes classifying exactly type of weird we all are.
BTW – I’ve read Doug Casey for some time. Was successful speculating in financial markets when he was younger. Has lived in many countries, traveled through many, many more. He has a very interesting perspective on markets, gov’t’s and peoples as someone that has traveled throughout the world, being successful taking risks. Internationalman.com Like your son, very open and honest in his opinions and doesn’t really give a shit what others think.
I count my blessings, though my son makes me do it on his old abacus.
I like Casey… I think eventually, if I send him enough annoying emails and inane comments on his blog, he’ll donate here just to shut me up.
He has been like that since 4ever. A serious funny kid.
Ahh, there you are, Paulita. Lurking in the background, watching, listening… 🙂
I’m realizing that TBP “family tree” is more complicated than I had imagined. Kind of like a small town, where everyone is either genetically related or socially related. I can’t tell, here..
[clever child way up there was referring to maggie.., but yes he sounds like one, too. Fruit probably didn’t fall too far from the tree. (Fruit sounds nicer than nut.) ]
Dinky dow.
This “Clever child” way up there refers to her as Maggie because that’s her name. You didn’t clarify that he sounds like one too. One what, you seen to be implying inbred nut. Maybe we are inbred socially or politically, one lady on here says I’m the brother she never had and I feel like she’s the sister I never had. Sometimes we fight like in laws at a picnic. Many, if not most of us are estranged from our families because they are insane liberals, self hating whites and other freaks.
If that makes me an inbred “Fruit” so be it.
If an article posted here isn’t presenting me with new information or a new take on old information I don’t have time for it.
Dang, more complicated than I figured.. Reunions must be interesting with this bunch. Thanks, Fleas, for getting me back on the straight and narrow.
And, I have one sister in Sante Fe, NM who is a nice socialist/marxist-don’t talk much with her. So, yeah, include me, too.
Would “leaf” been less offensive? Branch? I don’t know you that well to tell if you’re yanking me around or being serious. Or both. I guess that’s part of the fun.
Dinky, I could be wrong (and ec will be along shortly to affirm that I have been so before).
But, I think you are a keeper.
Thank you for the vote. Time will tell.
MagNag – so how does El Coyote fit into all this? Just wondering as names change over the years.
Dinco.
I like dry witt and Farr side before he was syndicated. Dinky dow is “Your Nuts” in Vietnamese. Gallows humor is the best.
Fleabaggs – I did not know the meaning of Dinky dow, so it was sort of wasted. I get the humor now, though.
As for the rest – after reading back over your comment, I concluded that you really are (were) upset with me. Some explanations – the “Clever child” was to Maggie as sort of a compliment that she figured out that DinCO was “name starting with D” and I live in Colorado, and that since she did boot camp in 1984 (I think from some other comment), she is younger than me by maybe 10 years, therefore the “child”. A joke, or a lame attempt at one. The falling from the same tree is (I thought) a common way to say that children quite often are similar to their parents – her son is a genius and from her comments she is quite intelligent as well. No inbreeding implied, or that they are nuts.
I, too, come here for interesting links and the comments that follow. I will NEVER be intentionally mean to someone, unless they’re being an asshole to me, then all bets are off. My comments are meant to be informative, thought provoking, and sometimes just joking around. Life is too short to be serious ALL the time; there has been time for that in the past and will be so in the future.
I am very much the I in INTJ, so it is fun to joust with like kinds, I guess. As far as “family” goes, for some reason in some ways, Mark and I seem to have much in common. Others, not so much. I get the “online family” part.
No harm intended.
Dinco.
No sweat. I’m also a counter puncher when I know someone deliberately being a dork.
Maggs is clever. Me and Mark are cousins of sorts. Between born near each other in Jersey in the late 40’s to our experience before and after Nam. We are the only two that ever write about it and are glad to be in our right minds more or less.
Fleabaggs, Paula knows my son and she thinks he’s probably normal because she is a Gen Xer and her kids were raised with her different view on life. However, both she and I had children who were the same age at the same time, though I was ten years senior to her.
Now? She’s almost caught up. Not quite.
I’m Aunt Mags/margar to her kids, and Mag (apparently Nag) to her. A lot of people here at TBP have relationships that extend beyond and PAST the blog and I think, as most do, that is really interesting. I think you get it, Fleabaggs.
That makes this place special.
Maggie..
So that’s the connection. I thought she was you or Cee Dog spoofing us. In fact I mentioned it to her(now it’s her) the other day.
My opinion on Eisenhower changed over the years:
Nowadays I find him insufferable, because what is a warning about the MIC in a speech at the end of his presidency other than an ethical personal bankruptcy declaration?
And Doug, after last year seeing first hand what some of Silicon Valley’s finest are doing/implementing in regards to ML (machine learning; euphemism AI = artificial “intelligence”) I’m now rather sure there will be no ‘singularity’ in those fields within my life time (~35 years.)
Maybe you are correct about the “Singularity” and its delay but in the meantime the robot revolution is going to be killer.
No opposition from me on that one!