“A government big enough to give you everything you want is a government big enough to take from you everything you have.” —Gerald R. Ford
Last week, I opened my brokerage account and found one of my larger stock holdings down over 95 percent. I tried furiously to buy a whole lot more, but it turned out to be a “glitch” on the New York Stock Exchange, and all trades were cancelled. What’s super weird is the dramatic price glitch only happened in Barrick Gold and Berkshire Hathaway, although there were other market disturbances. On June 4, Barrick was down 98.54% and closed up 2 percent. Berkshire Hathaway was down 99.97% and closed up .6 percent.
Needless to say, I almost had a heart attack when I first saw it. I’ve owned several companies that went bankrupt, and that’s usually what happens. From one day to the next, in a matter of minutes, the stock is down something like 95% or more, and I’ve lost all my investment in the blink of an eye. What could have caused this absurdity on the New York Stock Exchange? Why did only these two stocks have such dramatic price swings? I was abruptly reminded of how vulnerable digital wealth really is…it can literally just DISAPPEAR for lots of reasons. Not a reliable or sustainable store of value. I’m still waiting for my Russian ETFs and stocks to be unfrozen by the government, and I have no idea what to expect there, except more capital losses to write off in excess of $50K. Kind of ironic, since Russia is thriving!
In 2020, Warren Buffet of Berkshire Hathaway took a $565 million position in Barrick Gold and then sold it in 2021. When he sold, Seeking Alpha published a piece, Why Buffett Is Wrong About Barrick Gold. It was the only gold mining company he owned. Note, this last February, billionaire Stan Druckenmiller sold some of his tech stocks and bought the two largest gold miners in the world: Barrick and Newmont. Moreover, the highly respected Paul Singer announced that he was setting up a precious metals fund (Hyperion). Could something be happening behind the scenes between Berkshire and Barrick again? And could this be why mostly these two stocks were glitched?
Warren Buffet does the O-H-I-O with Student from Ohio State University’s Fisher College of Business at Piccolo Pete’s in Omaha, NE. Photo by Aaron Friedman from Wikimedia.
Something else caught my attention last week, also. Philadelphia’s University of the Arts shut down as a result of an unexpected cash shortfall and expenses. This follows an announcement that the Pennsylvania Academy of the Arts will be closing next year. I dug a little deeper and found that colleges are now closing at a pace of one a week. While most of them seem to be small, private, tuition-dependent institutions with shrinking enrollments and meager endowments, it also has to do with losing their accreditation status. Without accreditation, these institutions are dead. Graduates get no leverage in the job market with a degree from an unaccredited higher education institution.
Colleges and universities sell education, packaged up nicely with degrees and diplomas. The idea is that graduates will make more money in the workforce than those who don’t have degrees. Higher education is a business, but a strange one, divided into public and private operations. Are there public and private grocery stores? Not really. I mean there’s Costco and Sam’s Club, where you can purchase a membership, but that’s about it. There aren’t some grocery stores that are funded by the government and others that are funded by private endowments. In fact, grocery stores are not “funded” at all! Colleges, like grocery stores, are supposed to be free-market businesses that make money.
A free market is not one that is helped or controlled by the government. It is a type of economic system that is subject to the natural forces of supply and demand, and clearly there’s an oversupply and less demand now for higher education in the U.S. economy. So why do we call the United States a free country when the government has usurped the free market forces of supply and demand with financial aid and publicly funded institutions? It goes back to the Higher Education Act of 1965 when President Lyndon B. Johnson declared that higher education was no longer a luxury, but a necessity. Financial aid for students has been central to higher education ever since.
President Lyndon B. Johnson signs the Higher Education Act at Southwest Texas State College as others look on.
While this aid helped plenty of lower and middle class students get a higher education, it has inflated salaries of administrators, and has created dysfunction in the industry. I think U.S. higher education is the most expensive in the world, similar to health care. I worked at two public higher education institutions as a Study Abroad Coordinator and then Director, and I was appalled by how much money the administration and tenured faculty make. Note, salaries at public institutions are public knowledge, so let’s just look up a few at one of my prior employers (Eastern Illinois University), using the Public University Administrator and Faculty Salary & Benefits Database for Illinois. The President made $325,412 and the Provost/VP made $200,690. Nine administrators made more than the highest paid professor at $164,781.
Since I live in Michigan now, let’s also look up some salaries on the Michigan Government Salaries Database. Who do you think makes the most money? The Senior Chief Investment Officer (Treasury) made $571,486 last year. Second in line, is a Community Health Psychiatrist making $411,639. Surprisingly, there’s a plethora of government-funded “community” psychiatrists underneath, making a ton of money serving as the intermediary between big pharma drugs and mentally-ill people. They are literally the highest-paid state employees. Follow the money and you can usually figure out some things about what the community is buying; in this case, it’s management for mental illness. Psychiatry in America is medicine, whereas psychology is counseling. From what I can tell, Michigan’s tax dollars are enrichening the top salesmen for psychotropic medications.
For some strange reason, I had always thought that working in government was supposed to be a public service, and I always assumed that these folks had made financial sacrifices to be there, for the good of their communities. But why even bother starting a business and being an entrepreneur in the real economy when you can get an excellent benefits package and a high salary from being a public service employee in the government. I’ve never made more than $70,000 a year, and I thought that was a lot for a job I loved. Good lord, what happens next? Education, healthcare, etc. is pricing itself out of the market and going bust. If I have a serious health issue, I’ll be going to Asia.
This is why I believe in small government. Big government is the ouroboros, the snake eating its tail. It cannot stop! And it’s been feeding on every industry you can imagine. Not only do “funded” businesses eventually price themselves out of the marketplace, but they become inefficient and lackluster. They become leccaculos to their funders. Leccaculo is an Italian word; lecca means “lick” and culo means “ass”…please put them together on your own. What this means is that we have become a nation of leccaculos (brown nosers) because we have allowed the government to replace the natural law of supply and demand with fake money.
Without a doubt, the very best education that students can now get is in the natural law of supply and demand, and doing good business in their line of work. In today’s world of abundance, lots of people get lots of money by begging others to give it to them through grant writing and lobbying, not necessarily by offering a valuable product or service. This is the Trojan horse of higher education today; the better you are at being a leccaculo, the more fake money you get from leccaculo funders. In tomorrow’s world of scarcity, people will need to apply “natural” economic laws to their work, unless there’s tyranny. While I’m not looking forward to inflation, I am anxiously awaiting for leccaculoism to go out of style and real work to return.
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