The wise and witty

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 I enjoy reading or listening to a guy called Dmitry Orlov.  He wrote a book (Reinventing Collapse) that says that our industrial economies are collapsing and the main difference between the USSR and the USA is that a centrally planned industrial economy used up resources less efficiently than a capitalist industrial economy and that, as a result, one collapsed 20 years ago and the other is collapsing now.

For the avoidance of doubt, I enjoy reading him because he's an original (and witty) thinker and he is probably directionally right - AND NOT because I particularly want the world to 'collapse'.

His blog just posted an interview he did recently.  In it he talked about the 1% that own 90% in an economy like the United States (not that we are much better).  He said something that really caught my attention:

Their wealth is ephemeral. It only exists as numbers and letters on pieces of paper.  Their wealth is denominated in future industrial production that does not exist.

Orlov is different to most pundits in that he doesn't then offer a series of prescriptions to remedy the problems - so that we can all get 'back to normal'.  He views the collapse of Western industrial societies as inevitable and counsels practical adaptation rather than political fixes.

I was really struck by his characterisation of the ways the wealthy hold their wealth as 'denominated in future industrial production'.  I guess this can apply to the various forms of capital market products (shares, bonds, funds, etc), to the sort of employment we commonly think of as a 'good job', to any real estate where value is not anchored in practicality, and even (perhaps especially) in future claims on governments.  He's saying the wealthy are actually not wealthy!  They only think they are - and the process of collapse will uncover the real situation.

I think I worked out something similar 15 years ago.  My rationale was different.  It occurred to me that there were / are what economists call principal agent problems shot through our modern society.  The things that stood out to me were:

1. Public companies commonly didn't (and still don't) operate in the interests of their shareholders.  
2. Most financial intermediaries have all sorts of conflicts of interest.
3. Government bureaucracies have equally serious conflicts of interest.

It seemed to me then that, if agents are not reliably representing principals on a systematic basis, strife is pretty certain to follow.  It prompted me to:

1. Make direct investments in food and fibre.
2. Avoid (as much as possible) intermediated financial investments.
3. Expect nothing of governments in the medium or long term. 
4. Think about what might happen if ..........

Moora Farm is not a perfect hedge against the sort of disruption Orlov anticipates, but its a partial one. 

I came across something else a day or two ago by my old favourite Wendell Berry.  Whereas Orlov is clever / witty, Berry is sober and even majestic.  The article, which I've read before, is at this location.  He argued, 20 years ago mind, the exact opposite of conventional wisdom about urbanisation and scale economies.  Instead of seeing the drift from rural to urban as inevitable and progressive he said clearly and cogently that it was detrimental with much more lost than gained.  I was 'sent to the city' by the sort of influences Berry describes.

Time will tell where value really lies.