The Daily Reckoning PRESENTS:
Strategic
Investment's Daniel Denning on the real effect of the War on Terror...
WELCOME TO THE
by
Dan Denning
"The will of man is not shattered, but softened, bent,
and guided, men are seldom forced to act, but the are
constantly restrained from acting. Such a power does not destroy, but it
prevents existence; it does not tyrannize, but it compresses, enervates,
extinguishes, and stupefies a people, till each nation is reduced to nothing
better than a flock of timid and industrious animals, of which the government
is the shepherd."
- Alexis de Tocqueville, Democracy in
In the Halls of Justice, he likes to be called
"General." No article . Just
"General," like a Brazilian soccer player or an American pop-star.
But there's nothing funny about John Aschcroft's War,
or, I should say, the War in which he's a General on the domestic front.
Ashcroft, whose Department of
Justice, came under fire this week for reporting 775 missing or stolen weapons
and 400 missing laptops, is organizing the domestic front in the War on Terror.
Over dinner Sunday with some old friends who still live and work in D.C, (
which I grudgingly admit to being a former resident of) we discussed not only
Ashcroft's favorite nickname for himself, but the
growing warlike nature of America, and what it might mean for stock values and
the economy.
The War on Terror is subtly but decisively changing
The emergence of the
For most of the 20th century, the American economy poured
its resources, via government spending and private R&D, into developing new
technologies to win the space race and
the Cold War. Economic production,
at least from a macro-strategic level, was geared toward winning an ideological
battle. Then our ideological foes collapsed.
The Berlin Wall fell. George Gilder rose up. And for a brief moment in
history, we believed we were in world where perfectly efficient markets and
perfect competition would seamlessly allocate capital to those companies making
the world a better place for you and me. Lower prices and
better DVD players for all.
Alas, this was more a vision than a reality. And now, as the
percentage of GDP which we spend on defense spending
begins to climb its way back to Cold War levels, we're again seeing a shift in
the focus of our economic policy makers. Instead of cheap consumer electronics,
our national goals will now be developing more sophisticated tools to spy on
each other in every facet of our lives, from cameras in public places, to
identity cards, to "virtual" government wiretapping of our on-line
communications, our medical records, and our financial transactions.
What a tragic irony. Technology didn't make government less
powerful. It made it more powerful. And thus Americans are in danger of
becoming less free. The government is doing what it's always done, using
technology to steadily extend it's reach into the
private lives and personal matters of Americans-all in the name of a War that
is permanent. Thus the
Acknowledging the existence of the
There are only four major U.S defense
conglomerates left, Lockheed Martin, Northrop Grumman, Boeing, and Raytheon.
They are all sure to get a large chunk of new spending. But there will be thousands
of other smaller companies who get a chunk of defense
contracts. Tracking those companies-what they do and how their niche
technologies fit into the Warfare State-will make some investors incredibly
wealthy.
It's a new kind of "Blood in the Streets"
investing which we're already doing at Strategic Investment.
The second major consequence of the warfare state is more
ominous. Getting enormously rich is your only effective deterrent against a
more powerful government. Fighting for your liberties will be much harder.
No self-respecting lover of liberty could be happy with a
scenario where the government gets more powerful, more intrusive, and generally
enjoys popular support all the while. The world Orwellian doesn't do justice to
a situation in which millions of allegedly free people willingly give up their
rights to privacy and to great wealth.
And on the privacy front, I'm sorry to say there's little
you can do to stand in the way of the
Ashcroft, no ideological bedfellow of Clinton's, sounded
astonishingly the same when testifying in front of Congress about the Patriot
Act, which Congress passed last October he said that those "who scare
peace-loving people with phantoms of lost liberty. . . .Your tactics only aid
terrorists, for they erode our national unity and diminish our resolve. They
give ammunition to
The Clinton-Ashcroft-Bush axis seems to be saying this: in
the War against terrorism, you are either with the government, or you are
un-American. No doubt the FBI's carnivore system will systematically search
this very e-mail for anti-American sentiment. And if you should choose to
forward this to your friends, be warned, you're probably being watched, too. All in the name of freedom, of course.
What's most dangerous about the emergence of the warfare
state is that in the spirit of being "team players," Americans
tolerate steady incursions into their own decision making. Here's just a minor
example. I went to see the new Mel Gibson movie "Signs" the other
night. Before the show, an usher came down in front of the audience and asked
for quiet. He then proceeded to lecture us on cell phone etiquette,
conversational etiquette, and how we should all scoot to the middle of the row
to clear extra seats.
Don't get me wrong. I'm all for good movie etiquette. But
what astonished me was that he not only suggested these things, but then
threatened to kick anyone out who failed to comply. This final ultimatum was
met with enthusiastic applause by the sheepish audience.
Self-sufficient people tell their neighbors
to shut up. They don't need a bully to do it for them. We are slowly in the
process of transferring all responsibility for mediating our civil affairs to
the state. We are becoming, as Michael Ledeen says in
his book Tocqueville on American Character, "meekly subservient to an
enlarged bureaucratic power: the corruption of our character, and the emergence
of a vast welfare state that manages all the details of our
lives,"-including how we behave at the picture show.
We have gone, since Ledeen wrote
his book, from the welfare state to the
That power is absolute, minute, regular, provident, and
mild. It would be like the authority of a parent if, like that authority, its
object was to prepare men for manhood; but it seeks, on the contrary, to keep
them in perpetual childhood: it is well content that the people should rejoice,
provided they think of nothing but rejoicing. For their happiness such a
government willingly labors, but it chooses to be the
sole agent and the only arbiter of that happiness; it provides for their security,
foresees and supplies their necessities, facilitates their pleasures, manages
their principal concerns, directs their industry, regulates the descent of
property, and subdivides their inheritances: what remains, but to spare them
the care of thinking and all the trouble of living?
Tocqueville wasn't talking about Hitler's
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------