We begin with an observation by Adam Smith. Yes, that Adam Smith, straight out of An Inquiry into the Nature and Causes of the Wealth of Nations itself. To some, this book ranks somewhere with, say, Paul's second letter to the Thessalonians. Whole schools of economics seem to be based on these two simple sentences:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

And this statement has traction even today, when there are no medium-size brewers anymore (only the very small and the very large), when the butcher is routinely portrayed as a monster by professional herbivores, and when the baker is redefined as a common carrier. Everyone will pay lip service to Smith's thinking — that is, everyone except the so-called Democratic Socialists, the Bolsheviks without borscht, who probably don't think much of Paul, either ("If any would not work, neither should he eat" — 2 Thess. 3:10).

It is, however, possible to defer too much to the wisdom of the marketplace. This is not so much a problem with Adam Smith, though, as it is a problem with the expansion of the marketplace to the point where the greedy and the stupid are allowed to intersect, to become a Venn diagram of "People from whom you should never take investment advice." Unfortunately, Wall Street these days is dominated by those people, with the following undesirable results:

The last 50 years of Ford's existence have been spent in abject subservience to an increasingly myopic market, one that values companies with the same hyperactive, distracted unpredictability of my friends and I trading Topps baseball cards in 1988. Right now that market is obsessed with the technology sector, which means Ford needs to act like a tech company in order to keep the market happy. That, in turn, requires public and frequent genuflection at the altars of "mobility," "sustainability," and other buzzwords that have no tangible or measurable meaning at the moment.

Right now, Ford's deep knee bends aren't cutting the mustard with the stock-picker crowd. Investors are far more impressed with hip money, losers like Snapchat or Tumblr, than they are with, say, a company that builds nearly one million hugely profitable pickup trucks every year. It's not enough for Ford to have superiority in the majority of meaningful American market segments, nor it is enough for the logo that once adorned the country's cheapest cars to be a genuine aspirational marque. Wall Street wants the company to go play with electric toys.

Well, maybe not Tumblr. In 2008, Microsoft bid $44.6 billion for Yahoo, but no sale: Yahoo seemed to be insulted by the smallness of the MS bid, and just to prove a point, in 2013 Yahoo bought Tumblr for $1.1 billion in cash. Four years later, Yahoo's core businesses were absorbed into Oath, a new Verizon subsidiary that was simultaneously taking over AOL, for less than $5 billion.

But Wall Street is in New York City, and people in New York City, apart from their inability to make picante sauce, are bound by a vow to object to things like Ford's F-series pickup, which sells to those Deplorable people west of the Hudson and east of the San Andreas, even though almost all of Ford's profits come from trucks. Come to think of it, "profits" are a dirty word today: Wall Street is devoted to jargon like "EBITDA," which translates to "Earnings Before Interest, Taxes, Depreciation and Amortization."

Still, this is hardly the fault of Adam Smith, who died in 1790. And if the Democratic Socialists object to the idea of people acting in their own interests, they object even more to this, also from The Wealth of Nations:

Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs.

How dare anyone have "superior wealth" in this day and age? And how could those of "inferior wealth" want to help them? I would remind this bunch that "God hath not appointed us to wrath" (1 Thess. 5:9).

But maybe I'm worrying too much. I mean, it's not like anyone even knows who Adam Smith is anymore:

Can we get Adam Smith for an interview?

See what I mean? (Graphic via Daniel Pryor.)

The Vent

  18 November 2018

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