Podcast: Play in new window
- Who’s Watching The Watchers
- South Africa: 600,000 Security Guards & Only 150,000 National Police
- Fear Those Who Disagree – Return To Tribalism
“The irreconcilable differences between various political perspectives and the intolerance for or unwillingness to engage in dialogue rests on differences in definitions and cultural contexts. Four traditions have developed from differing cultural bases and a whole differing understandings of what justice is, for that matter, what truth, what rationality are. The influence of cultural bias and tradition has to be acknowledged, and if you want, let’s debate the merits of each, except that I fear we’re in an age without dialogue and with more and more propaganda, and it becomes clear that to even have a voice takes a real effort.” —David McAlvany
Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
David, I know you and your wife have debated on getting another guard dog, but you’ve got a lovable guard dog, but actually this dog responds to language that you’ve taught it that really we don’t necessarily speak. When you give it an order, I don’t understand what you’re saying.
David: No, it communicates very clearly, but it’s because the training has taken place. Now the debate has now gone across two generations. My dad loved German Shepherds. I loved Malinois. We had a German Shepherd. Mary Catherine calls them German Shedders, and so the [unclear] for hair and the collection of hair on all things, clothing, furniture, floor makes dogs detestable to some degree. As delightful, as beautiful, as friendly, as loyal, it doesn’t matter, they are hair factories. So we’re not getting a second, much to my chagrin.
Kevin: Isn’t it interesting though that dogs or even we will respond to language that we’ve been taught? Maybe not everybody understands that same language, but it is, it’s very interesting when you tell him to stop barking or whatever you’re speaking a different language to him. I’m wondering if that doesn’t happen to us sometimes. With all this going on with Zuckerberg, are we being taught a language to speak right now that maybe isn’t the language we should be speaking?
David: Yeah, I think that’s fair. It’s because in part we don’t take time to find our terms and understand what is being said. We make some assumptions and we work off of what is familiar to us. So we grow accustomed to communication, and it implies meaning, and we assume that we’re speaking the same language. But even this last week, Mary Catherine and I are having a conversation and I said, “No, that’s not what I said,” and she said, “That’s exactly what you said.” And she gave it to me in different words and I’m like, “This is fascinating.”
Kevin: We’re not saying the same thing.
David: Humanoids from the same continent, maybe different states, maybe that’s it, Colorado versus Texas. No, it’s just fascinating how you just miss each other if you’re not clear on your definitions. It happens even innocently within a home and sometimes not so innocently outside of the home.
Kevin: So on the topic of guard dogs, because the very fact that you have a guard dog, I mean obviously that offers you some protection, but you think about the world, we look at these campaigns right now, you’ve got people actually talking about defunding the police, and it’s like, okay, so when you defund the police, who actually comes to the door when you call them? And I’m just wondering if you’re not going to see a lot more guard dogs.
David: Last week’s client-only conference, this is for our hard asset strategies, there was a question about platinum and South African companies that mine it, and that was put on the table. The majority of platinum in the world comes from Russia and South Africa. Obviously it’s verboten to invest in Russia today, so South Africa is the only way. That was the question, what would you recommend? Interestingly, this morning when I read my Bloomberg articles, first thing this morning, simple statistics stood out and would’ve summed up the answer we provided last week even better. It almost made me reflect on how important intellectual traditions, along with the freedom to debate those traditions— Hopefully I can connect that for you.
Kevin: Well, and South Africa’s a place that you can talk about, Dave. Your father went there over 30 times. You’ve been there a number of times yourself.
David: Yeah. Today in South Africa, according to Bloomberg, there are approximately 600,000 people in private security compared to a 150,000-strong national police force.
Kevin: Wow. Say that again. All right. 600,000 people have private security guards.
David: No, not have private security. 600,000 people, that’s what they do. They are in private security. They’re carrying machine guns and protecting private citizens.
Kevin: And how many police are there?
David: 150,000.
Kevin: So one in four is a police officer, but private security, 600,000 people.
David: Four times more. So carjackings and kidnappings force anyone that can afford it to protect themselves, their families with private armed security. What does that say to you about a country that cannot provide safety to its citizens, lacks a justice system to hold crime in check? That is a failing state, maybe even an already failed state, and of course these are on a relative basis, it’s not that bad. There’s people who would scramble from other parts of Africa to get to South Africa as an even better place to be. If you’re comparing it, say, to Zimbabwe, I could judge that better, and maybe a return trip—it’s been a few years since I’ve been there—would give some insight.
How bad is it? Is it truly a failed state? My most recent trip to South Africa was in 2016, but to be honest, it’s been in a state of decay since the 1980s when I was there as a young teenager, and I say that just to counter any suggestion that sort of my aging and nostalgia factor enter the social commentary. “Oh, it was great at one point” “Oh, it’s gone to the dogs.” It had its issues then and it still has its issues now.
Kevin: Well, and when you went with your father back when you were much younger, I mean you were with the South African Defense Force, and I think they were giving you special instructions just as you were driving around.
David: I’ll never forget musing afterwards about the South African Defense Force guys driving us—again, this is in the ’80s—and instructing us on defensive and evasive driving in case of a carjacking. And you don’t put that on a tourist brochure, do you? I didn’t have my driver’s license yet. This is just how we grew up. I kind of thought it was something everybody needs to know, how to deal with a carjacking. I had a very unique upbringing.
Kevin: Yeah, you did. Well, and I think about your father warning that the ANC was a communist-backed organization, and at the time that I came to work for your father, Mandela was in prison, and Don, your dad, said, “At some point Mandela may be freed and the ANC may take over.” And it’s not that there was anything necessarily wrong, particularly, with Mandela, but it was tribalism and it was communism and there were some forces that were larger than the issues that people thought that they were fighting, such as racism. There were other issues going on, and people with agendas were taking those issues and riding them like horses.
David: Yeah, narrative control is pretty critical. The government transitioned in the 1990s. Mandela and the ANC took over, and there was a dual reality that emerged. On the one hand, you had improved social justice. On the other hand, you had a further downgrade to country’s economic trajectory. That was solidified.
This is plain and simple, ideas have consequences, and when you embrace corruption it’s rarely a companion to economic vitality. So the last several decades things have gotten worse, not better, even though things from a political standpoint did change back in ’93 and ’94. More often than not, when you look at corruption, it’s a symptom of institutional rot which if left unaddressed can contribute to a failed state.
Kevin: Well, and I think we have to go back and look at why your father was so interested in South Africa, obviously from the gold perspective but also from a political perspective. We have to go back to those Cold War days. Remember when Khrushchev basically said that “we will control the areas that have the greatest natural resources,” and the Middle East and South Africa were on that list. Now Khrushchev said that 20 years before you were going. But you went— How many times did you go to South Africa before you were in college?
David: Yeah, you’re right. The reason we went was because it was a critical piece in the puzzle. If you looked at the world as a chessboard, this was really the place that you needed to make sure pressure was managed well. Between Russia and South Africa—this again goes back to the ’70s and early ’80s—between Russia and South Africa, they controlled 96% of the world’s strategic minerals. So of course if that’s Khrushchev’s stated goal, then it kind of matters what happens. And so, I mean, we have a lot of history in South Africa as a family. I traveled there four times before I was 15 years old. My father was at one time considering moving us there, traveled to the region at least 30 times. His love of the country and the people ran deep. You had under the surface one of the most strategic reserves of minerals in the world. Above the surface, one of the most magnificent treasures on earth, natural beauty with few places in the world to match it.
Kevin: Yeah, and so you talk about where South Africa is today, 600,000 security guards for 150,000 actual national police officers. So when does crisis happen? I mean, is it a slow cook or does it happen instantly?
David: Yeah, I think one of the reasons I like Rüdiger Dornbusch, he’s an economist no longer with us. This will be an inexact quote, but crisis takes more time in coming than you think, and then it happens much faster than you would have thought.
Kevin: A little like Hemingway when he talked about going broke, right?
David: Exactly. It’s slowly and then all at once.
Kevin: Right.
David: Exactly. You’re right. So that was the case. That is the case in South Africa. I think frankly, that applies to the US debt markets. How long can the markets ignore terminal math? Longer than you think, until an unwind of excess happens faster than you would’ve thought. Then one day everyone notices the problem, and the behavior within the marketplace is like the swarm of swallows, moving as one complex organism in an instinctively organized fashion. That’s the nature of panic and crowd behavior.
Kevin: Well, and we talked about Russia and South Africa and the Middle East earlier, but at this point, China, I mean you look at geopolitics, and we have to watch what’s going on between the United States and China. Are we in a slow cook or are we about to have the all-at-once?
David: It’s the same thing. It’s both. Geopolitics exist in that slow and churning nothing-is-yet-burning state. That is the US and China relationship. A pregame state of tension and stress, and the transition from slow to fast. It’s a little bit like the button pushed in Star Wars, engaging the hyperdrive propulsion system and bringing us to travel at the speed of light.
But the first comment I want to make was about South Africa. Special thanks for those of you who joined us on the call last week. Sometimes there’s numbers that stand out. 400% more private security than national police, what does that say to you, just knee-jerk? You’ve got a security problem. Individuals are solving this problem because the state can’t or won’t. When confidence fails and the system doesn’t support stability, you make your way as best you can with the resources you have. You solve problems creatively, intelligently, on occasion collectively with other like-minded people.
Kevin: Yeah, but what if the people who were supposed to protect you from the problems are the ones who are actually creating the problems? I’m thinking of the CIA, the FBI.
David: That takes me to Zuckerberg’s admission last week that the CIA and FBI pressured Facebook, and of course the internal Twitter files released to the bevy of journalists after Musk acquired the company confirm this as well. The CIA and FBI pressured these social media groups to suppress the Hunter Biden laptop story. Again, this is not conspiracy. This is Zuckerberg last week talking openly about taking calls from the CIA and FBI and being given explicit instructions.
We’re not talking about the Hunter Biden laptop story. Questionable, questionable pay-to-play activity from Burisma, pushing instead a scripted story of Russian collusion and election interference. The interference in the election was irrefutably from the CIA and FBI as evidenced by the Twitter files, as evidenced by the very words of Mark Zuckerberg last week discussing the instructions he followed. Indications of a failed state when you desperately reach for control, when silence and dissent—silence is required and dissent is not tolerated. I mean, this is the stuff that you see in China, where you cannot have a public opinion. We’ve got unrest on the increase, year over year 18% more unrest in China. But they actually, if you counted what would be there if they had a free press— Boy.
Kevin: It struck me during COVID how important it was, the old days of actually talking to each other. You and I go out on Monday nights. We talk about a lot of things, okay, but we actually can share stories. I can say, “Well, I’ve talked to these clients and these people this week, and this is what their personal experience is,” and you tell me the same types of things. As we combine stories and actually have personal testimonies, we start to realize that it’s a little bit different narrative than what we’re hearing when we turn the media on, or even—and what we’re seeing here with Zuckerberg—even social media where you think you’re actually talking to friends and keeping in touch that way. This thing’s been controlled by the CIA and the FBI.
David: Well, Zuckerberg sees the political tide shifting, I think, and has come clean. Musk already made public hard evidence from the emails and conversations Twitter had on those two topics, along with the Biden administration’s direct orders to social media groups to cancel anyone with an opinion on COVID which didn’t perfectly match the Biden and Big Pharma narrative.
So this is what’s difficult to imagine. We’ve got fake social media to combat fake news. Okay, is fake news a problem? Yes, but fake social media scrubbed, curated, moderated, however you want to describe it, provides important clues, right? Like the numbers from South Africa, it’s just a statistic, but this provides an important clue on just how much the rule of law and the First Amendment have been degraded. Censorship was a conspiracy theory until the censors confessed.
For me, okay, I don’t know. Sincerity is questionable. I don’t know the motive, why the mea culpa from Zuckerberg in the last week or so. Again, the cynic in me, it’s like, okay, you remember the Buchenwald prison guard claiming that he was told to do it, can’t be held responsible, he had to, responsibility lies elsewhere. So blame shifts upward to our state security apparatus. That’s essentially what happened with Zuckerberg. He’s like, “Actually, I was just doing what I was told.” Domestic security, we’ve got that provided by the FBI, global security, the CIA. I don’t know if I buy the mea culpa. But Jack Dorsey, you remember?
Kevin: He started Twitter, didn’t he?
David: Yeah. Not sure he’d offer the same apology. So let’s just appreciate Zuckerberg’s comments for what they are. I think Dorsey would have a full-throated defense of content moderation consistent with his view of how the world should be structured.
Kevin: I don’t know if you remember this, but when Trump won the first election and Hillary was so shocked, someone in Google had snuck a camera in and filmed, it was like a 45-minute apology by the guy who ran Google. I can’t remember his name, but he actually started weeping on stage as he was apologizing for the outcome. I’m thinking, “Google, apologizing in a closed-door meeting with the employees for the outcome of the election.” Think about that.
David: Well, who is watching the watchers? For the CIA and FBI to be doing the bidding of the Oval Office, corrupting social dialogue with a body of lies and half-truths, cloaking an agenda in scientific garb, that suggests that a different kind of capture has occurred. This is not the dramatic carjacking at an intersection at gunpoint like happens daily outside of Johannesburg in South Africa. This is not a loved one being snatched and ransomed by a Soweto gang, but a collective, cognitive carjacking that’s being normalized, and now the language is just, we think we know what we’re talking about when we hear certain words, when we say certain words.
In this respect, the news media is complicit daily with its carefully chosen propaganda. The news, the social media, as pre-Musk Twitter and—as we now know from his own confession—the everyday that Zuckerberg candidly revealed. It’s not just a contrasting point of view, like, okay, here’s one theory competing with other theories or the difference in interpretation. This is more hard-edged. The difference in interpretation is considered factual, is considered absolute. So the difference in curation, the producer’s selection of what counts, of what is discussed, of what gets buried or killed in the evening news is based on a foregone assumption of an errancy.
We as consumers think that we’re just getting the news versus some carefully chosen set of facts. The American carjacking, if we can imagine it that, it’s truth held hostage. That’s a problem not easily solvable because if you’re not allowed to talk about it, you either concede through some form of obeisance or you fight, and modern liberalism is pushing for deference. It’s pushing for loyalty. No questions, no dialogue. And I think that’s dangerous at many levels.
Kevin: It’s funny that you just now said modern liberalism because it took me a while. When I was a teenager, I would get confused when someone would say, “You need to read this liberal education.” And I’m thinking, “Oh, I’m not a liberal.” I don’t really understand that, but then I realized liberals were conservatives—
David: This is an example of verbal capture.
Kevin: Exactly.
David: Redefinition of words. Benjamin Constant, Edmund Burke, these were your classical liberals when liberal had a different meaning altogether.
Kevin: Individual freedom and rights is what a liberal was before.
David: Fascinating.
Kevin: And they’ve changed the term. We talked about your dog understanding a language that we don’t, and that’s probably great for your own protection if you think about it. You can tell that dog to do what you would like it to do, not someone else tell that dog what to do.
But about a month and a half ago, a men’s group at the church I go to, they said, “All right, we’re going to get together and we’re going to discuss Christian nationalism.” And I thought, “Isn’t it interesting that that’s become a topic.” That is a word that was created, or those were words that were created for us to start to debate.
And think about how often we’ve done this, Dave, where a new word is introduced into the public discourse, or a new phrase, and we assume that it’s always been there, but actually it was created to create contention and separation.
David: Yeah, that’s a fascinating concept, just even thinking about the word Christian and the word nationalism and somehow associating them with anything that is biblical because you won’t find either word, you won’t find either word in the Bible.
Kevin: So there it is, and here we are. We’re treating it as if, oh, we need to now discuss this because this is part of the public discourse. Who told us that?
David: They did. They did. South Africa was reformed in the 1990s, for better and for worse. The endemic problems were not eliminated. Racism did not go away. Unfair treatment was just transferred and reshaped when white Afrikaans racism—we’re talking about the apartheid regime—became government-sanctioned black racism. And before you freak out, take a trip, go to South Africa, speak with the injured parties. If you are a Zulu, if you are an Indian, if you are a Colored, as they say in South Africa of anyone who’s mixed race, which in itself is so denigrating, you got the short end of the stick. Power transferred, but power did not transfer equally. It is not a representative government. If you think that that version of democracy is appealing, move there. Move there.
Kevin: I’ll never forget in the early ’90s, a Zulu pastor from South Africa who was a good friend of your father’s came to visit us, and he was a black pastor and he was fearful of the ANC taking over. What he said was, “You guys are all being sold a bill of goods that this has to do with white and black.” He says, “This is tribalism.” And he says, “I’m not sure by my being here in America and talking about this that my family will be safe by the time I get back.” He was part of the Zulu tribe that was not the official tribe of the ANC.
David: Well, power was concentrated in the hands of Afrikaners before, and now it rests in the hands of a single tribe. It’s no different here in the US. Social justice is merely an excuse for grabbing power. When you see these words used, and it’s like, oh, of course we want social justice. Of course, we’re concerned about environmental and social and governance concerns. But ESG issues, if you look at the last few years, driven to the front of Wall Street concerns just a few years ago, already proven to be, with a little bit of time passing, a tactical power grab. No discussion of real-world problems, practical solutions, just removal of all earlier forms of colonialism to be supplanted by the newer forms of colonialism.
Kevin: Well, and this isn’t new. I mean, Friedrich Hayek, the economist, said that social justice is the Trojan horse of tyranny, and that’s exactly right.
David: An amazing quote. I’ve referenced Alasdair MacIntyre’s book, Whose Justice? Which Rationality? several times through the years. He was a visiting professor at Boston College and often taught in my wife’s philosophy program. I think it’s important to mention again because the irreconcilable differences between various political perspectives and the intolerance for or unwillingness to engage in dialogue rests on differences and definitions and cultural contexts. MacIntyre makes the case that four traditions have developed from differing cultural bases and whole differing understandings of what justice is, for that matter, what truth, what rationality are. There’s the classical Greeks, the Augustinian Christian tradition, the enlightenment and modern liberalism. Modern liberalism claims the high grounds today for all truth and objectivity.
MacIntyre argues compellingly that the influence of cultural bias and tradition, this is where all of these perspectives come from, has to be acknowledged, and if you want, let’s debate the merits of each. Except that I fear we’re in an age without dialogue and with more and more propaganda, and it becomes clear that to even have a voice takes a real effort and a justification. You’re not against social justice, you’re against definitions, particular definitions of words and philosophies that aren’t really well explained or legitimized from the ground up.
Kevin: Well, the people in power don’t want us to be able to debate, but it was first and foremost in our country,
David: First Amendment enshrined the difference of opinion as having a high value, knowing that when opinions are moderated and controlled, reality gets hijacked through the control of definitions, through the control of meaning, both implied and explicit.
Kevin: Through the control. Well, and that’s context, isn’t It?
David: Yeah. MacIntyre reminds us that meaning is contextual and traditions of interpretation lead us down very different paths. We have a path dependency being put in motion without adequate dialogue as a prerequisite to knowing if we’re on the right path to begin with. MacIntyre preferred the Aristotelian tradition to any other, not far from my own view. I’ve got a soft spot in my heart or soft spot in my brain maybe for the Nicomachean Ethics. So if content is to be moderated, dialogue limited, trust is a prerequisite or obedience is the requirement.
Kevin: So on the call last week, which was an investment call, these are investors, they’re asking the question about South Africa. There’s the tie if someone’s going, “wait, isn’t this market commentary?”
David: Yeah, yeah. Okay. Well, yeah, so you’ve probably said to yourself somewhere in the last 10 minutes, “Shut up about it. I’m here for market commentary.” Well, we’re not too far from the mark because consider with me the same questions from MacIntyre. Whose justice? Which rationality? applied to Russia and Ukraine, applied to China and the smoldering issues in the South China Sea, including Japan, the Philippines, and Taiwan to name only a few involved in the disputed nine-dash line. Tradition matters. Perspective matters. Definitions matter. Without careful and critical consideration, without ample dialogue, wars happen, and when that happens, everyone feels justified from their point of view.
Kevin: Is this why we have our national security advisors speaking to China right now?
David: Maybe. I mean, war is not required. Sometimes it’s necessary. I wish it weren’t the case. This is where communication is so critical. This is where compromise is so critical. When communication breaks down and there is a refusal to journey through empathy and conscientiousness to understand things from a different perspective, conflict becomes a greater probability.
And I think you do see that in last week’s trip. Jake Sullivan meeting with Xi Jinping. There is only one acceptable interpretation of the data. Any other considerations are absurd. The nine-dash line is taken as historical fact. That means that Japan and the Philippines, these are the aggressors. I say again, Whose justice? Which rationality? If you can’t appreciate the tradition as one of many and arguably imperfect, all you have left is coercion and violence.
Kevin: And see, what you say is coercion. If you look at any regime all through history that tries to retain power, they ultimately fall to coercion.
David: The irony of modern liberalism, once considered the champion of diversity and multiculturalism, of free and open inquiry, the bastion of intellectual honesty, the irony is that it’s merely propaganda, empty words, poser posturing. Turns out to be a little more than a tribal uprising, right? Dogmatists with a cause instead of simply the Xhosa, the Xhosa tribe, I mean. Still it comes down to, do whatever it takes to take power. That, the CIA and the FBI would support. A do-whatever-it-takes-to-maintain-power initiative casts a shadow over institutional legitimacy that makes confidence in the Fed and Fed monetary policy seem almost irrelevant.
Kevin: So in a way, what you’re saying is we all are probably going to be responsible to have our own guard dogs in whatever fashion. Gold is your own guard dog in your portfolio if you think about it. When somebody says, “Well, I wish we were on a gold standard, those were the days,” it’s like, well, no, we’re not, so put yourself on one.
David: It’s very true. We could talk a lot about gold in the market today. We could talk about GDP growth statistics from last week and consumer confidence. They all seem trivial as we edge closer to civil war. I don’t know that we have to have guard dogs. I’d rather have dialogue, but it’s becoming prohibited speech.
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You’ve been listening to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. You can find us at mcalvany.com and you can call us at (800) 525-9556.
This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.
