On Economic, Intellectual, Spiritual and Political Bubbles

We all know that there are economic bubbles that inevitably burst and punish investors for their irrational exuberance and willing suspension of disbelief about the laws of economics.

In fact, it seems that these bubbles are not so much built into the free market system as built into man, since we have more or less averaged about one per generation over the past two or three centuries. Thus, the "law of the economic bubble" is a painful lesson that each generation must learn anew.

I'm not an economist, but it seems to me that a bubble occurs when price outruns value, and it bursts when price returns to value, i.e., its actual worth. In 2006, the price of my house was absurdly higher than its value. In fact, even now its price is too high, but that's California for you.

But this is not a post about economics; or perhaps we could say that it is about "psycho-spiritual economics," for what I would like to suggest is that what occurs in economics reflects a deeper principle, and that there also exist intellectual and spiritual bubbles that eventually burst and send their investors hurtling to the ground.

To cite the most recent dramatic example, the climate change industry has been revealed to be a classic intellectual bubble. As with economic bubbles, its worth as a scientific theory became absurdly overvalued, to the point that more and more outrageous claims were required to prop it up. People were willing to pay the price, so long as the illusion of value was maintained. But since the bubble has burst, intellectuals who invested heavily in it are left holding penny stocks that even then no one will buy, for they are essentially worthless.

Most people are not scientists, just as they are not economists. Therefore, they rely on economic advisors to tell them how and where to invest, and they rely on science to tell them "what to believe," i.e., where to invest their credence. But science itself becomes a classic bubble when it morphs into scientism, because it pretends to know things it not only cannot know, but can never know in principle. And because man is everywhere man, this is when science begins taking on all of the trappings of a primitive and poorly thought out, ad hoc religion.

Darwinism is another example of a classic bubble. Obviously the theory of natural selection has some genuine value -- it is hardly worthless -- but nor is it remotely as valuable as its fundamentalist adherents make it out to be, for it is way out in front of its headlights. For the Darwinian faithful, the theory is virtually "priceless," since it explains "everything." It is a totalistic worldview into which the Darwinian invests all of his cognitive and spiritual funds.

But one of the first rules of investment is diversification. You want to invest in a variety of instruments with differing timelines of maturity, depending upon one's stage of life.

In my case, for example, I have some safe, short term investments in science, and some liquidity in the form of common sense and practical wisdom, but the bulk of my longer term investments are in religion, which is unaffected by transient intellectual bubbles (excluding, of course, heretical "manias" that predict the Second Coming, or a new caliphate, or a messiah in the White House, etc.; you might even say that false religions are always spiritual bubbles).

We all understand why it would have been a mistake to ask a man who had all of his holdings in real estate about the health of the real estate market in 2006. Even if he had his doubts, it would be very unlikely that he would broadcast them and place his economic position in peril.

Just so the global warmists. Even before the rest of us, they well understood that their theory -- and their intellectual fortune -- was in peril, so they needed to essentially engage in the sort of thing Enron did -- insist to all of its investors that their money was entirely safe and that the theory was "sound as a dollar." In order to do this, they had to "borrow" truth that did not yet exist. In other words, they used the collateral of their present knowledge to take out loans on future certainty. They assumed that the science would eventually pay off and confirm their intuitions despite the contrary findings.

But they cooked the scientific books in order to take out those intellectual loans, and now that the loans are due, they are in a position of intellectual bankruptcy. In 1995 they assured their creditors that 15 years hence, the planet would be dramatically warmer. This was good enough for the investors. But unfortunately for them, the planet did not cooperate, since there has been no appreciable warming since 1995. This is analogous to a business borrowing millions of dollars based on an economic forecast of a certain amount of profit and growth which fails to materialize.

At that point, the only option is bankruptcy and dissolution. Or a government takeover, which is what is occurring with the warmists. Their theory -- and their industry -- is simply "too big to fail," so now we are in the absurd position of the government not only owning failed automobile companies and banks, but non-viable scientific theories. But a non-viable scientific theory is in many ways indistinguishable from a religion, so the state is in the position of propping up and favoring an established religion, the religion of "radical environmentalism."

Science, just like the free market, is supposed to reward success and punish failure. Thus, under normal circumstances, there are built-in mechanisms of "progress" and "conservation" in both, the former promoting risk, creativity, and leaps of imagination, the latter promoting caution, consolidation, and extraordinary proof for extraordinary claims.

Thus, just as investors should have been skeptical of the extraordinary financial claims of a Bernie Madoff, people should have been far more skeptical of the extraordinary scientific claims of the warmists before investing in the theory. It might have passed as a decent intellectual hedge fund, but certainly not one's core investment.

President Obama is another example of a classic bubble. Why did otherwise sane people invest so much in this cipher? Indeed, why did they ignore all of the evidence that he was absurdly overvalued?

But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal.