I always try to read a book all the way through before commenting on it But I'm about halfway through John Lukacs "Democracy and Populism" and I'm a bit confused. There are moments of absolute brilliance here, a depth of perception I rarely find. Yet he spends huge portions of the book showing how our definitions of words like facism, totalitarianism, liberal and conservative are incredibly wrong. At the same time, he makes references to Hobbes and Locke that require a fairly sophisticated knowledge of philosophy. So let me get this straight, I don't know what facism is, but I have an indepth knowledge of philosophy? If you, like me, can't remember the tenets of Hobbes philosophy, basically he believed that people are by nature evil, well, not really, perhaps insanely selfish is the right description. Of course, trying to define the teachings of Hobbes or Locke or Aristotle in a few words is impossible. Lukacs is making an important point, that populism is a descent into hell, but damn, I wish he had more than 240 odd pages to prove his hypothosis. I should finish the book tonight, and hopefully will more soon.
On a different note, the world hailed the actions of the Fed this week. Why? The employment report on Friday, to me at least, indicates continued weekness in the job market. Yes, I know, more than "whatever the number" of jobs were created, yet the total number of unemployed INCREASED!!!! In the minds of Wall Street, the biggest problem is inflation, and god only knows prices are increasing. But ALL of the increase can be attributed to the rise in the cost of oil! When prices rise because of the scarcity, real or imagined, of a single commodity, that is NOT inflation. Rising oil prices increases the costs of many things. Take fertilizer for example. Much of the process of producing fertilizer requires the use of various forms of petroleum. The increase in the cost of fetilizer raises the price of producing raw foodstuffs. Add to that the added cost of transportaion because of fuel costs, and guess what, the cost of food goes up! Is this because there is too much money available for food? NO!!! It is because a bubble in oil prices is forming, and the ramifications are far flung.
Problem is, Greenspan and the Fed had little choice but to raise interest rates, because it's what is expected by Wall Street and the other brainless investment groups. If the Fed had not raised rates, the perception would be they lacked the courage to fight "a clearly inflationary" issue. Alan Greenspan is an incredibly intelligent economist. I first started reading his opinions in Ayn Rand's non-fiction works (yes, he submitted articles for Objectivist books, before Objectivism decended into a cult of personality) and he has a profound knowledge of market forces. He needs to be educating investors about what is really happening out there. Take my favorite example, tires. In the 60's, tires cost 10 to 20 dollars each, lasted 15,000 miles if you were lucky. Now inexpensive tires are $60, and last for 60,000 miles. That means in basic math terms the cost of tires has not changed in 40 years, so in real terms, they are nearly free! Problem is, most inflation formulae see $60 versus $15 and say tires cost 4 times as much as they used to. Greenspan knows this, he ses this, he must, he is not swayed by the emotional vagaries of an investor. However, he also knows you must play to the audience from time to time. Thus we increase rates, until he can educate the masses. Problem is, the masses are ignorant to such facts. They obsess about the 30 cent per gallon gas they bought, the $15 tires, and fail to see the value of what they are buying.
I don't know where this current economic ride is going to end. I have a saying, stolen from a song, that if the ride is worth the fall, let's ride. Unfortunately this ride is not worth any fall, let alone the one we are heading for. And if John Lukacs is right, it will be on much more than an economic basis.
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