The Magic Formula in America
At Mark Skousen’s libertarian FreedomFest in Vegas this year, Google-Facebook paranoia was pervasive.
Everyone imagined that Larry Page and Mark Zuckerberg were deeply interested in their private lives and political views.
They rebelled against my assertions that these Internet leviathans are chiefly victims of big government trying to make them accountable for “fake news” and “hate speech” in billions of posts. If the telephone company had faced this kind of pressure, the phone system would still be slower than the pony express.
Believe it or not, the US Internet is more fraught with government influence and entanglement than the Chinese one. Try Tencent’s WeChat and you’ll know what I mean.
Fined $5 billion by the Federal Trade Commission for so-called privacy violations, Facebook is becoming a manipulative maze of pop-up videos and encrypted groups and ad-minuses in disguise.
LinkedIn is so full of AI distractions that you cannot even complete an email without smarmy guidance toward some unwanted service.
Google is so beleaguered by politicians and congested with spurious artificial intelligence and obnoxious ad-trusions that its basic search function is noticeably deteriorating.
On the surface, US technology seems to be moving backward.
I myself wrote Life After Google in the conviction that Silicon Valley is delusional about the potential of its artificial intelligence, robotics, cloud-computing, and datacenters.
But that same slowdown I’m seeing in the US has pervaded the world economy.
Important Considerations for Investors in the New America
My theory of money as time and the related Tupy-Pooley abundance factor (mentioned in previous letters), shows no significant slowdown in world innovation.
As Marian Tupy and Gale Pooley are slowly persuading the world, the only metric that matters in calculating growth and creativity is how many hours of work it takes to buy any particular good or service. The time-price. And remember, time is the pervasive economic constraint that remains scarce when all else grows abundant under capitalism.
The time-price makes all the consumer price indices, GDP deflators, currency floats, and other subjective measures of value obsolete. It reduces the metric to a single fungible universal of hours and minutes.
This measure efficiently distills innovation into a single number that registers both the resulting increase in income and drop in costs.
The Tupy-Pooley factor disproves all the pessimists and shows that all the goods and services critical to human betterment have grown radically cheaper and more abundant over the last four decades or so, from searches and salmon filets to bananas and transistors.
They also show that national success by these measures correlates closely with a nation’s standing in the Global Freedom Index. This listing ranks countries by security of property rights, low taxes, and stable money.
These three items sum up The Magic Formula – described by Nathan Lewis in his new book on the path to economic growth. Lewis shows that throughout human history, progress has depended on these three mandates that can be summed up as one: the security of property against seizure and depredations by governments – whether through taxes and corruption or through the debauchery of the money.
Unfortunately, the United States has been sinking rapidly in its adherence to the magic formula. That means us investors can best serve America by diversifying around the world and in the Cryptocosm.
The Cryptocosm offers an immutable timestamped shared record of facts, titles, intellectual property, and money that can restore The Magic Formula in America and around the globe.