In economics, the term ‘bubble’ will mean different things to different people, but it’s safe to say that a bubble involves a dramatic mispricing of an asset or an asset class which leads to severe dislocations when those mispricings are brought back into line.
These mispricings are caused by inflation, or the increase in the money supply, credit supply or both. This increase provides the demand which is used to bid up asset prices. This rise in prices tends to be the foundation for a wider paradigm dependent on the continued trend of asset prices. For example, the recent housing bubble was fueled by the increase of cheap credit, which was a response to the post 9/11 recession. On the back of that, increases in stock and commodity prices, prospects in related businesses, and local small business activity all took shape. What culminated in the 2008 collapse started a few years before when housing prices started to slow, and by the depths of the crisis in late 2008, the damage had radiated to commodities, stocks, bonds, and local businesses, ultimately leaving the financial system as a while in a perilous situation.
Given the fact that the high asset prices seen were dependent on the increase in money supply during the early phases of bubble, the tapering of the monetary spigot brings with it the collapse as the asset price rises cannot continue upward without fresh injections of money or credit. If prices stop rising, they level off and then fall, exposing the weaknesses in debt structures and business models predicated on high asset prices.
That basic blueprint of bubbles-as-economic-growth has been at the heart of the post gold standard modern economic machine of the last 50 years or so. From the stagflation of the 1970s, to the 80s Savings and Loan crisis and 1987 crash, to the Internet bubble of the 90s, to the housing bubble of the 2000s, the economy has lurched from bubble to bubble, each one a bit larger than the last. As I write we’re in the midst of yet another bubble, constructed in the wake of the 2008 collapse to mitigate its effects.
A similar bubble has taken shape over that time in the cultural arena. We can term this the ‘social justice’ bubble, which has burst over the course of this past year in spectacular fashion, culminating in the election of Donald Trump.
Much like bubbles in economics, the social justice bubble was built on the back of an inflation, of sorts. Instead of the money supply increasing, what artificially increased was the value of certain words, to the extent that these words now have entirely new meanings or suddenly deemed to encompass things they didn’t originally. Thomas Sowell did a more comprehensive job of outlining this inflation, in addition to comparing it to the monetary variety, in his 1995 book The Vision of The Anointed. He writes:
[O]rdinary vicissitudes of life become “traumas.” Any situation which they wish to change becomes a “crisis,” regardless of whether it is any worse than usual or is already getting better on its own.
Verbal inflation, like monteary inflation, would have no effect if everyone understood what was happening and could adjust to it immediately. A ten-fold increase in the price level would mean nothing if everyone were free to add a zero to the sums in all contracts, laws, cash on hand, etc., and do so immediately. Inflation has an economic effect precisely because there is no such instantaneous and total flexibility. In the real world of lagging adjustments, borrowers pay back less than they owe, workers are paid less than they were promised, and the government cheats its way out of part of the national debt by paying it off in dollars that are worth less than the dollars that were borrowed. Verbal inflation likewise enables some people to cheat others. When “harassment,” “discrimination,” or even “rape” are redefined to include things going far beyond the original meanings of these words, there would be no real change if everyone understood what the inflated words now mean and neither social stigmas nor the penalties of the laws applied to the vast range of new things encompassed by these new meanings.
In both cases, runaway inflation us not just a zero-sum game. Monetary inflation not only redistributes benefits but can also reduce the sum total of those benefits, by undermining the credibility of the monetary unit and with it undermining the predictability of the whole system of which it is part, causing the economy to be less productive as people restrict what they do and plan, in order to avoid vastly increased risks. For similar reasons, human relations suffer when the verbal common currency of social interaction loses its meaning and predictability, so that people now protect themselves from new risks by various ways of withdrawing from one another and reducing their cooperation.
The intellectual justification for monetary inflation as a policy comes from the mostly Keynesian view that falling prices are a grave danger to an economy. Beyond this, it is viewed by many economists as a cause of recessions and depressions, and as such there is no good reason why inflationary policies should not be pursued, if the alternative is to allow prices to fall. The end result is to effectively take the position that unless prices rise higher and higher in perpetuity, the world will come to an end. Indeed, this is where most name brand economists, like Paul Krugman are, having never seen an inflationary policy proposal that wasn’t the right thing to do at the given time.
This paradigm is reflected in the cultural Marxist ideas of ‘social justice,’ and ‘tolerance.’ Much in the same way prices can never decline lest the economy collapse, social justice acolytes hold that culture can never become more traditional. Consider this quote from a prominent 20th century cultural Marxist Herbert Marcuse, taken from his essay Repressive Tolerance:
This essay examines the idea of tolerance in our advanced industrial society. The conclusion reached is that the realization of the objective of tolerance would call for intolerance toward prevailing policies, attitudes, opinions, and the extension of tolerance to policies, attitudes, and opinions which are outlawed or suppressed. In other words, today tolerance appears again as what it was in its origins, at the beginning of the modern period–a partisan goal, a subversive liberating notion and practice. Conversely, what is proclaimed and practiced as tolerance today, is in many of its most effective manifestations serving the cause of oppression.
There are two important things to note. First is the admission that ‘tolerance’ really means ‘acceptance of all viewpoints apart from the ones we disagree with.’ The second is the logical reality of Marcuse’s view means that tolerance is an ever fluid concept. At the time he wrote this, in 1965, for example, homosexuality was very much an attitude which was suppressed. According to Marcuse, ‘tolerance’ in this instance means to be intolerant of anti-homosexuality.
Applied to 2016, you can substitute transgenderism for homosexuality. The issue is that as time goes on, any and all things which were looked down upon for any reason become subject to a Marcusian appeal to ‘tolerance.’ Taken to its logical extension, it means that human standards for decency are always negotiable in accordance to this tolerance doctrine.
The verbal inflation that Sowell describes is a tool used to prop up the social justice complex in the same manner as monetary inflation is used to prop up the price level. In both instances, the props are needed because the underlying foundations are extremely weak.
For example, in the name of ‘equality’ and ‘tolerance,’ the physical standards required to serve in the armed forces have been decreased in order to allow women to pass the threshold. This means that the armed forces are being filled with objectively less fit, less strong individuals than before. However, to speak out against it is deemed as ‘sexist,’ the word in this case referring to the truism that men and women have different capacities for physical undertaking and thus are not going to be equally suited to performing the same exact tasks.
The effect of the social justice bubble has been to elevate words such as ‘sexism,’ to great heights, to the the point they supersede reality. The violations of racism, sexism, homophobia and others have been crudely redefined in modern discourse to mean ‘disagreeing with anyone apart from straight white, Christian males for any reason.’ Thus, once charged with such a violation, at the very least the conversation is over. You have ‘lost’ the argument. It is in this manner that ‘dissidents’ are silenced, in accordance with the intolerance of their position as espoused by Marcuse.
It creates an environment in which pretty much everything becomes a social justice cause, with every slight an assault on humanity. In other words ‘ordinary vicissitudes’ suddenly become traumatic, as Sowell described. The totality of this can be described as ‘political correctness.’
The cultural Marxist influenced academics at Western universities gave the intellectual green light for the social justice bubble, and the media which megaphones it far and wide facilitates its spread to the public at large, so as to steer it in the right direction, away from traditionalism and towards a more nihilistic world.
During this expansion phase of the bubble, crazy things start becoming the new normal. During the housing bubble it started to be normal to see basically any space with a toilet and a sink going for seven figures merely because of their location in metropolitan areas. This was seen as a good thing because it was evidence of the ‘robustness’ of the market. If everyone wanted these properties such that prices were rising, it must mean that they were truly valuable. Basic supply and demand, they would say, not understanding that the ‘demand’ was artificial in nature.
Similarly, the social justice bubble has yielded similar madness. The sensitivity to ‘microagressions,’ the very existence of ‘trigger warnings,’ the need for ‘safe spaces,’ the looming threat of ‘rape culture,’ the never ending scourge that is ‘cultural appropriation,’ among other things, are the everyday symptoms of the bubble. Social justice defenders say these are good developments, because they show the robustness of the ‘tolerance’ movement in their acquiescence to anyone with a grievance, no matter how small.
Witch hunts for those who dare to disagree with the cultural Marxist line are the order of the day. Indeed, even not voicing your approval loudly enough is sufficient to get you into hot water, as Brett Favre found out last summer.
Seemingly every week there is a new celebrity being put on trial in the court of public opinions for some comment he or she made that might be deemed offensive to some group. At the very least, these trials end in ostracism for the defendant, and often times they result in boycotts, terminations and blacklistings. Look no further than Billy Bush, who got fired from the Today Show for merely laughing at Trump’s crude talk 11 years ago.
The sort of madness that allows for such absurd housing valuations and offensive comments to be worthy of termination is par for the course in a bubble. It also means that the demise of the bubble is baked into the cake. An economic bubble requires a never ending expansion of credit and debt at ever greater amounts. This is impossible for the simple fact that production, and thus incomes do not rise in the sort of exponential manner needed to keep up with the required debt expansions.
At some point, there will be ‘too much debt,’ which will require debt loads to lessen, which in turn reduces the impetus for asset price increases, which in turn threatens the house of cards which was founded on such asset price increases. This is what happened in the Great Financial Crisis of 2008.
In terms of the social justice bubble, the requirement of a never ending expansion of grievances was always going to test otherwise well meaning people who merely wanted to be left alone. That idea, being an anathema to the social justice warrior, has resulted in the insertion of the social justice cause being inserted into all facets of life, from the regulation of Halloween costumes, to concerns over the symbolism of one’s flag, to the politics of public bathrooms. You can’t even watch a ball game without being lectured to about some social justice cause or another.
At some point, when faced with constant charges of racism or sexism, used as an attempt to bully someone out of their ‘offensive’ position, the defendant will finally respond: ‘I don’t care.’
Indeed, this ‘I don’t care’ was a significant part of Donald Trump’s campaign to Make America Great Again. This was highlighted in the first Republican Debate of the Primary season, in the now infamous exchange Trump had with Megyn Kelly.
Kelly opened the debate with a question about several ‘misogynistic’ things Trump had said over the years on social media and elsewhere and asked if that represented the temperament befitting a President. The totality of the situation is illustrative of the social justice bubble in that Kelly, in this instance a proxy for the media generally, was raking a potential President of the United States over the coals for high crimes against social justice, and doing so in front of a record national audience to maximize the level of social ostracism. That it was the first question of a debate to help determine who holds the office of the Presidency further highlights the importance ascribed to social justice by its purveyors.
Trump responded in a playfully dismissive way, and then made the more serious point that the United States no longer had time for political correctness. In doing so he signaled that he was not going to allow the media, the megaphone of the social justice bubble, to bully him as they had done to Republican candidates in the past.
More significantly, he gave the green light to others to finally say ‘I don’t care’ without fear. Trump’s campaign was the bursting of the bubble, yet it wasn’t until late on election night, when Wisconsin flipped from blue to Trump red that the social justice set realized that something had gone horribly wrong.
Up until that point they had surmised that the vast majority of the country held their views on social justice issues, and agreed with their methods of wielding power over the population through constant programming via the news and entertainment media, indoctrination of youth at colleges, and public shaming of dissidents.
This was evident in the way Hillary Clinton campaigned, using the enormous sums raised at six-figure per head dinners in the Hamptons and Hollywood to fund her attack through the use of legacy media. She relied heavily on celebrity endorsements, who used that legacy media platform to blare the message that it was ‘cool’ to vote Clinton because famous people said so.
They didn’t entertain the idea that there were huge swaths of the country, namely the parts beyond the city limits of NYC, San Fancisco and Los Angeles who not only didn’t buy into the social justice bubble, but were actively against it, in part because of the fact that bubble was built disparaging people like them. When you turn on the television and see caricatures of rednecks with funny accents and their ‘Jesus freak’ attitudes being made fun of, you tend to feel that the new social justice order might not be for you. Throw in your small town being decimated by the factory shutting down, and you’re ripe for revolution.
And it came on November 8. That night was to the social justice bubble what the failure of Lehmann Brothers was to the housing bubble. It was the moment when no one could further lie to themselves about the true state of the world. It was an incontrovertible rebuke to the idea that the housing mess was contained to subprime and that the economy was set for a new expansion forthwith. It was an incontrovertible rbuke to the idea that Trump’s rally sizes didn’t matter, that the mainstream polls were fundamentally underestimating the true nature of his support, that demographics meant that Hillary Clinton was an overwhelming favorite to win.
Yet, it wasn’t viewed as such. One of the most curious features of modern bubble thinking is the fact that the inevitable burst of the bubble leads its cheerleaders to deny vehemently that they were fundamentally wrong about the causes of said bubble. Instead, they prefer to believe the mistake was a more tactical error. If only the Federal Reserve hadn’t raised interest rates so fast, or if only XYZ regulation had been put into place, they would say, the financial crisis wouldn’t have happened, or it would have been much less severe.
Furthermore, they go so far as to promote the reconstruction of a new bubble to replace the mess left by the bursting of the old one. This is what happened in late 2008 and early 2009, as a bevy of bailouts, interest rate cuts, money printing, and debt expansion took place in order to prop up an economy savaged by the burst housing bubble. The falling prices symptomatic of the busting of a bubble and a recession/depression had to be actively combated, according to conventional economic thinking, no matter how much money printing and new debt was needed. The fact that prices had collapsed precisely because they were too high in the first place, such that artificially forcing them back to crisis-inducing levels doesn’t make sense, is summarily ignored.
Similarly, the bursting of the social justice bubble, and with it the idea that everything is racist and sexist, has been responded to by merely repeating those charges, but a bit louder than before. This started on CNN during election night, when Van Jones declared that the election was a ‘whitelash.’ Most of the usual suspects in the mainstream echoed this language. Consider the opening few sentences from this Slate article, tiled There’s No Such Thing as a Good Trump Voter:
Donald Trump ran a campaign of racist demagoguery against Muslim Americans, Hispanic immigrants, and black protesters. He indulged the worst instincts of the American psyche and winked to the stream of white nationalists and anti-Semites who backed his bid for the White House. Millions of Americans voted for this campaign, thus elevating white nationalism and white reaction to the Oval Office.
This is nothing more than misguided conjecture, but in the eyes of social justice bubble thinking, this rises to an accurate description of reality. The narrative has gone from ‘Donald Trump is a racist, sexist, homophobic xenophobe,’ to ‘The United States is a racist, sexist, homophobic, xenophobic country for electing him.’ Instead of reexamining their worldview, the social justice left has chosen to double down.
It is in this context that the post-election protesting, rioting, and assault on the Electoral College is taking place. And more than anything else, it is highlighting the reasons Trump won, and the reasons the social justice bubble was popped.
In protesting, and in some cases inciting violence over what is a legitimate election result, the social justice left has displayed the very fascist tendencies they accused Trump of harboring. The enlisting of psychiatric professionals to assist with Trump related trauma, and the inability for college students to attend class owing to an election result suggests that these people did not have the mental fortitude required of taking charge of a nation. The fact that the legitimate election result has now seen the Electoral College, a pillar of the founding of the country, come under fire, is a microcosm of the overall social justice desire to undermine traditionalism generally.
All of that was shunned by the electorate on election night, and for good reason. Despite this, the post election outrage suggests that the social justice left will not go quietly into the night, and will try to reconstruct the burst bubble anew. At the vanguard of the reconstruction efforts has been the media, just as it was at the vanguard of the construction of the bubble.
It was the media which megaphoned the social justice agenda far and wide, and it is the media which hounds non-adherents to the social justice agenda into submission. With respect to the election, the media airwaves were essentially a nonstop Trump bashing exercise, with the exception of a handful of personalities on Fox News.
To the extent that one feels legitimately traumatized or fearful of a Trump presidency, it is most likely down to the media, which endlessly sensationalized every slightest thing about Donald Trump, and built him up to be a caricature of everything that a social justice warrior would despise. That this ‘monstrosity’ still ended up winning is understandably a shock to that system. The problem is the compromising of that system in the first place, through the false characterizations and ginning up of a false narrative by the media.
If the media hadn’t presented anyone with the temerity to have disagreements with the status quo in politics and the culture as a whole as literally Hitler 2.0, the reactions to a Trump victory would have been far less hysterical. Furthermore, had the media presented an accurate picture of the electorate, rather than believing that the entire country thought the same way as liberals in NYC and San Francisco did, they would have better prepared its audience for the strong possibility that Trump could win. It didn’t, with most major news outlets believing, even on election day, that a Clinton victory was a 80-90% certainty.
Yet this same media, which now has had its credibility shattered, has pointed to ‘fake news’ as a substantial reason for Trump’s victory.
Looking with horror as the pieces of the burst bubble are strewn across the floor, tactics such as this, and the incessant gaslighting (Trump’s transition team is in shambles! Trump is breaking his promises! Trump might put Neocons in his cabinet!) are blatant attempts to wrestle back control. The simple fact is that ‘citizen journalists’ like Mike Cernovich, Paul Joseph Watson, Vox Day, Stefan Molyneux, Bill Mitchell and others were spot on throughout the course of the election, while the legacy media did nothing but create a false narrative based on faulty polls and faulty political analysis.
In their death rattle, these legacy institutions are using their last shred of credibility to attempt to strip those who were on the right side of the argument of their own credibility. These citizen journalists dominated the internet and social media during the campaign, using their much smaller but much freeer platforms to engage in ‘real talk,’ circumventing the legacy media and its singular, social justice approved messaging. Even President Obama admitted as much, lamenting the fact that narratives are much harder to implement on the masses thanks to the freedom that is the internet.
The key to the success of the alternate messaging was that it was grounded in truth. The social justice bubble was founded on the cultural Marxist idea that anything goes as long as it feels good. Such a principle, if you can call it that, is unsustainable, much like the attempt to expand credit indefinitely is unsustainable. The opposition to the social justice bubble was successful because it was full of truisms that people knew deep down, but were afraid to say publicly. Multiculturalism doesn’t work. Men and women are different. Illegal immigration is bad.
It is why this opposition will not falter now that it has been unleashed. In order to reconstruct the social justice bubble, its proponents will have to be ever more radical, ever more violent and ever more punitive in its efforts, and in so doing will expose even further the intellectual, moral and historical bankruptcy of their position.
To paraphrase Von Mises, there is no way to avoid the collapse of a boom brought about by expanding credit. The only determination is whether that collapse will be voluntary, via a cessation of credit expansion letting the chips fall where they may, or the final collapse of the currency itself as a result of an unending credit expansion.
In terms of the culture war, the US chose to have a voluntary collapse on November 8, by symbolically halting the verbal inflation decimating the culture. From here, it is incumbent that the country and culture moves forward to truly positive heights, such that the results of rejection the social justice bubble are sufficient enough to render those who want to restore that bubble to look unequivocally outrageous.