Davos Without the Hookers

Posted by Bill Bonner - Diary of a Rogue Economist

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Screen Shot 2013-11-11 at 8.00.48 AM

Screen Shot 2013-11-11 at 8.00.48 AM“Behind every great fortune there is a crime,” said Balzac. Before the age of capitalism – which gave people the means to build their fortunes without taking anything away from others – that was largely true. 

So, what lay behind the fortune which Anthony van Sallee used to buy up much of Long Island, New York, in the 17th century: larceny, murder, slavery? 

All of the above. This ancestor to the Vanderbilts… to the Whitneys… and through their mother to our own children was, in the language of Baltimore’s street life, “one mean motherf*****.” 

What did he do? Where was he from? The name gives us a clue… 

The “van” part is Dutch. Like most of New York’s early settlers, he carried the “van” which means “of” or “from” to tell us that he was from Sallee. 

But where is that? Ah. Check the map. You will find no Sallee anywhere near Amsterdam or Liege. In fact, it is not to be found anywhere in Europe. Instead, it is a city in North Africa. On what was known as the Barbary Coast, the center of the white slave trade. 

What follows is a discussion of involuntary servitude, capitalism and how to explain it to a hundred or so drunken Irishmen crammed into the back of a Kilkenny bar… 

A Strange Journey

Travel does not always take you where you want to go or where you expected to be. But you often end up where you ought to have gone in the first place. 

A recent trip took us to Kilkenny, Ireland, where we were to attend an economics festival called Kilkenomics, which can be loosely described as “Davos with jokes” or, perhaps more pertinently, as “Davos without the hookers.” 

In fact, it was not much like Davos in any way, except that a few people with PhDs in economics tried to tell others what to do. 

First, Kilkenny has little in common with Davos. The former is a tiny, quaint, medieval Irish city. The latter is a chic resort in the Swiss Alps. 

Second, the focus of the discussion at Kilkenomics was not on how to improve the world, but on how to give the limping Irish economy a boost. 

Third, the conference organizer – one of Ireland’s best-known and most savvy economists, David McWilliams – did not invite Janet Yellen or Paul Krugman. Instead, he invited your editor. (We took that as a sign of desperation. Or else there is something wrong with him. As a precaution, we avoided the tap water.) 

Kilkenny is a charmingly Irish city. There is a pub on every corner and two or three down the street. A man in need of another pint has only to haul himself a few steps in any direction. 

Even a few steps were too much for a couple of the girls we ran into on Saturday. They were dressed in the latest fashion for fat girls: tight white dresses cut off just below the crotch… and awkwardly balanced on high platform shoes (“arse-raisers” in the vernacular). 

It is hard enough to walk on stilts when you are sober. After three hours in Cleere’s bar, it is practically impossible. Coming out onto the street, they had scarcely gone three steps before they began listing dangerously. One caught a light-post and steadied herself. The other, no public utility within reach, sank to the street. There she lay, on the cobblestones, as we stepped over her. 

The Opening Salvo

We had just come from a discussion with economists. Every economist knows that people always act in their own rational self-interest. Since we couldn’t figure out any way in which the girl could benefit from laying in the middle of the street – in the rain… in a party dress hiked up to the very edge of decency – the girl could not exist. 

Inside Cleere’s, the discussion had been on the nature of capitalism. How could it be kept on the straight and narrow? This was the question we were meant to address. But the crowd had already been drinking for hours before we began. No two people had the same idea about what capitalism actually was. And our opponent was as well prepared as we with persuasive air. 

“These dreamers… these idealists… imagine a perfect world of commerce, invention, and freedom,” he began, pointing in our direction. 

“But it doesn’t work that way. In practice, they get a world where money talks… and it tells us all what to do. They preached deregulation… and brought about the worst financial crisis since the Great Depression. 

“They’re always complaining about the government, but if it were not for the government this crisis would have turned into another Great Depression. Without the government, we’d all be completely unprotected against these greedy, rapacious rich people. 

“Besides, they would be nothing without the government. The government provides the infrastructure. It provides a system of laws and justice that makes it possible for them to earn their fortunes. 

“Government is the source of major innovations, too. It wasn’t the free market, for example, that developed the Internet; it was the government. Private companies were offered the opportunity to develop it themselves. They refused. Because they couldn’t figure out how to make a profit on it. 

“So I say, stop bellyaching about the government. Stop pretending that the free market is the source of all good things. And sit down and figure out how we can get these banksters off our backs… and make this mixed system, of capitalism with some measure of state control, work better.” 

This opening salvo drew a warm applause. He had scored a direct hit amidships. He had the drunks on his side. We hadn’t said a word and we were already taking on water. 

More tomorrow…