The Triumph of Politics Over Science

Junk Science, Junk Policy Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] The Triumph of Politics Over Science - The post-WWII depression that wasn’t… - Bogus models take precedence over actual observation… - “What we need today after the COVID panic is a new liberating Congress like the one that entered office in 1946”… Recommended Link ["Your chance to see this is coming to a close”]( [Read more here...]( This could be the most important message you see all year if you are serious about securing your financial future. A famed gold expert has said we’re witnessing a rare occurrence in the gold sector that we haven’t seen for years… In this short message he urges you NOT to invest in anything until you hear this. [Click Here To Watch His Briefing]( Somewhere in the Berkshires March 3, 2021 Editor’s note: After WWII, leading economists warned the U.S. would plunge back into depression without the massive wartime government spending. They were wrong, using faulty models. Today America’s no.1 futurist, George Gilder, argues that a different set of faulty models is wreaking economic havoc. [George Gilder] Dear Reader, After World War II, as the economy was converted from a garrison state to meet civilian needs, economists predicted dire times. Just as after World War I, conventional academic wisdom saw no upside to the end of wartime spending that, according to academic legend, ended the Great Depression. A sweeping Republican victory in the Congressional election of 1946 had ended the economic regime of wartime government planning and spending. Dropping from 42% of GDP to 14%, government spending plummeted by a total of 61% between 1945 and 1947. Some 150,000 government regulators were laid off, along with perhaps a million other civilian government employees. The War Production Board, the War Labor Board, and the Office of Price Administration were all dismantled. Declared Cato Institute’s Arnold Kling in 2010: “As a percentage of GDP the decrease in government purchases was larger than would result from the total elimination of government today.” No Doom Keynesian economists, working from their models, confidently predicted doom. In 1945, Paul Samuelson, likely the most influential economist of the later 20th century, prophesied “the greatest period of unemployment and dislocation which any economy has ever faced.” Nominal GDP did drop a record 20.6% in 1946. But a drop in government spending after a war — whether World War I or II — has regularly unleashed a boom of private creativity and learning. Government spending, however wasteful, is part of GDP and national income. But GDP numbers miss the reality of an economic resurgence. In fact, 1946 marked the end of the Great Depression, which had continued during the war and was simply disguised by price controls and defense spending. Just as it did after World War I — when a sharp depression in the income statistics gave way to the “roaring twenties,” while government spending plummeted and interest rates soared — the U.S. economy revived after World War II in a 10-year boom. Taxes dropped drastically with the creation of the joint return, and the overall tax burden — measured by government spending — fell more dramatically than at any other time in American history. The warnings of doom were thoroughly discredited and were said to be based on faulty models with faulty inputs. Fast forward to today, and we’ve been subjected to a different set of faulty models and inputs. Recommended Link [Prepare for a "Cash Panic"]( [Read more here...]( We're at the very beginning of a mass financial panic – but not the kind most people expect. The words "mania," "euphoria," and "frenzy" are all over the press... while fund managers are STAMPEDING out of cash at record levels, pumping billions of dollars into a specific corner of the markets. A dramatic financial event over 20 years in the making has finally begun. [See What It Means For Your Money]( “Respect the Model” The world has needlessly suffered from massive economic dislocations, and livelihoods have been destroyed as a result. Millions around the world face severe poverty and even starvation. Lockdowns were prompted by terrified warnings of millions upon millions of deaths from COVID-19. UK professor Nial Ferguson’s computer model predicted as many as 510,000 deaths in the UK and 2.2 million deaths in the U.S. This model terrified politicians into beginning lockdowns, but it was completely without basis. Ferguson had used the same model to previously project the potential death toll during the 2005 Bird Flu outbreak. At the time, he estimated 200 million people could die, but the real number was in the low hundreds. Regardless, a great cry arose to “respect the science.” In most cases, what this call actually means is “accept the model” — an algorithm claimed to predict outcomes accurately given the right inputs. Models Are Essential — Right Models Models are wonderful things. We could hardly think without them. Models alone, however, yield no information and thus cannot be a source of scientific knowledge. Models work by simplification, by abstracting away details that are merely contingent to get to an algorithm applicable to any formally similar circumstance. Essentially, all conceptual thought is some form of modeling. Economics would be nowhere without certain extremely simple but valuable models, such as the “law” of supply and demand. That model basically says if there are only two demanded goods in an economy, one routinely bartered for another, and the supply of A goes down, buyers will have to give more of B to get A — assuming nothing else has changed. Ok, but a reasonable fellow might reply, “well it’s only verifiable because it’s irrelevant. In the real world there are millions of products, many of which can substitute for each other. And that ‘nothing else has changed’ assumption is never true.” He is right on all counts. All that missing information really would matter in the world, hopelessly messing up our model. And that gets us to the essence of all models, their usefulness, and their limits. To isolate intellectually how changes in supply affect changes in demand, we create a drastically simplified version of the world. To get at an important truth, we assume a lot of untruths. The result is a concept that’s very useful in our minds but of very limited use in predicting outcomes in the world. To make accurate predictions about the world, the modeler must identify every relevant variable and get every one of them right. Recommended Link [A colossal $2.8 trillion more to play with]( [Read more here...]( The stock market will never be the same again. Especially because this event could bring an additional $2.8 TRILLION worth of assets into play. The developing situation will also disrupt the $7 TRILLION banking industry and the $3.45 TRILLION online retail industry. The best part is... this is still in its early stages of development. Which means you could take advantage of this early stage to become extremely rich. [Click Here To Learn More]( To observe that supply and demand generally have inverse effects on each other is wisdom. To trust an algorithm to predict how much platinum will buy how much pig iron a decade from now is folly. Even models that can predict the future yield no information in themselves. Now, let’s turn to the use of face masks, which Dr. Fauci initially counseled against but later recommended, maybe even two at once. What does the above discussion on models have to do with wearing masks in public? Models Over Actual Observation We have a century of papers of observations, not models, showing mask use in the general public doesn't work. This evidence is ignored in favor of models and theory that insist masks do work. So they told everyone to wear masks in favor of the models, not the actual observations. The best experiment was the Danish one, which tracked how people actually use masks after being instructed in their proper use. Results? Don’t bother wearing a mask. They’re just not very effective. But guided by “the science,” in other words the models, the politicians got behind the masks. They’ve used mask-wearing as a tool to browbeat you into more mass hysteria, to continue the panic and keep the madness going. “My major shock was discovering how much sheer stupidity exists in the population, particularly among the political class,” says Jeffrey Tucker, the editorial director of AIER — the American Institute for Economic Research. In his stirring recent book Liberty or Lockdown, he summed up the stupidity as a stream of imbecile commands and urgent exhortations: “Go inside, no wait, don’t go inside!” “Stay healthy, but shut the gyms.” “Get away from the virus, but don’t travel.” “Don’t wear a mask, wait, do wear a mask.” “Only gather in groups if you are protesting Trump!” His list continues, citing examples mandating gloves in nail salons and masks for five-year-old’s, even though dozens of studies show masks are futile in resisting a virus and five-year-olds are immune to COVID-19. Masks on children may well impair the development of the crucial part of the brain that recognizes faces and facial expressions and renders us social beings rather than sociopaths. Jeffrey Tucker is right. I too have been shocked by the skyscraping towers of sheer idiocy, blocking out the sun with its immune-boosting vitamin D and common sense. Where’s the Congress of 1946? Today, like long ago, we face a similar period of depression imposed by government policy. As many as one-third of small businesses have closed, and GDP has collapsed, as it did after the world wars. Many economists believe that only multi-trillion-dollar increases in government spending can compensate for private sector depression, just as they said after WWII... But only real innovation and entrepreneurial creativity can propel economic revival. Oceans of government spending, by contrast, result in waste and distortion, corruption and malinvestment. What we will need after the COVID panic is a new, liberating Congress, like the one that entered office in 1946. Unfortunately, we won’t be getting one anytime soon. Regards, George Gilder for The Daily Reckoning Editor’s note: If you didn’t know already that the odds were stacked against regular investors and retirees, the Gamestop fiasco proved it beyond a doubt. Regular folks were making $1,000s — some even made millions — by taking advantage of a big mistake hedge funds had made. Then the “little guy” got shafted by Wall Street, their smart investments ANNIHILATED in a matter of hours. But while the whole world was watching David take on the Wall Street Goliath… [a handful of our colleague’s readers were able to lock in a fast profit with none of the drama.]( That’s because he’s known about the mistakes hedge funds make for decades… And on January 28th, the same day the Gamestop short squeeze was crushed, he passed along a trade on a stock NO ONE was talking about… Helping his readers score a solid 83% gain in a matter of hours. Anyone who took advantage of that trade could have invested $2,500 and used it to pocket $4,583 before dinnertime! But he wants to tell more people about the mistake he and his readers have been targeting… So he recorded [a quick 5-minute video]( to tell you more about it. This information could mean the difference between getting trapped in the latest meme stock craze, or hitting big, steady, consistent wins by seizing on Wall Street’s blind spots. The choice is yours, really. [Click here to learn how to take full advantage of Wall Street’s blind spots for potentially huge gains.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [George Gilder][George Gilder]( is a world-renowned investor, writer, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance. During America's last big tech boom of the late-1990s, Gilder was widely considered the best stock picker in the world. George also pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute's Economic Roundtable, as Program Director for the Manhattan Institute, and as a frequent contributor to A.B. Laffer's economic reports and the editorial page of the Wall Street Journal. Throughout his career, he’s been profiled in People, Wired, Forbes, Fox News, the Wall Street Journal, The Economist, Harvard Business Review, the American Spectator, and more. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. To end your Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [unsubscribe here.]( Please read our [Privacy Statement](. For any further comments or concerns please email us at [feedback@dailyreckoning.com](mailto:feedbackdailyproof@dailyreckoning.com). 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