The Mugwumpery

From The Big Bonanza: An Authentic Account of the Discovery, History, and Working of the Comstock Lode by Dan DeQuille (Hartford, American Publishing Company, 1876):

CHAPTER LIII. HOW FORTUNES ARE MADE AND LOST

Bulls and bears – Doings of the brokers – On a margin – “Pussycat Tilde” and “Bobtaile” – Going up! – Dealers and dabblers

During the prevalence of a big stock excitement, times are lively along the Comstock range. Virginia City then hums like a Brobdingnagian beehive. All who failed to make fortunes on the occasion of previous excitements in stocks are going to do better this time. They have seen how these things work and this time are going to sell when they can do so at a fair profit. They don’t want the last cent; they will give someone else a chance to make something.

This is the way they talk at the start. As soon as there is a marked advance in stocks, however, they will be heard to say: “As soon as I can double my money I am going to sell.” In three days from the time of their making this assertion, stocks have taken such a jump that they could sell and double or more than double their money. Everybody is saying, however, that they are not selling for half what they are worth; that they will sell for twice or three times present prices be­fore the end of another month.

The men who were intending to sell whenever they could double their money cannot think of doing anything of the kind as things are now looking. Instead of selling they become excited, put up their stocks (which they had probably bought and paid for “out and out”) as a “margin,” then put in all the money they can raise besides and buy as many shares of their favorite stocks as they can in any way manage to secure. Stocks still go up, and each day these dabblers will be found counting their profits. They have invested largely in the low-priced stocks of “outside mines” – mines in which nothing of value has yet been found, but mines in which, all are saying, grand developments are liable to be made at any time – mines, in short, which in dull times are generally designated as “wildcat.” The masses – the servant girls, chambermaids, cooks, hostlers, washerwomen, preachers, teachers, hackmen, and draymen – are wildly and blindly buying these low-priced stocks, and from day to day they are going up “with a rush,” and everybody is getting rich. Our men who only “went in” to make a fair profit now tell you that they made yesterday ten thousand dollars; today they have made fifteen thousand dollars, and in a week or two they will say that they are worth a quarter of a million, half a million, or a million of dollars.

But they are not going to sell yet; no indeed – the rise has only com­menced. Pretty soon stocks fall off a little. Never mind, tomorrow they will do better. Tomorrow they are still a “little off,” as is said when stocks are going down. The next day they are rather “soft,” which is the same thing as a “little off.” However, that is all right. Our dealers – amateur speculators – have some points given them by a friend who is on the inside. A development is about to be made in a favorite mine. The “bears” are trying to break the stock; but they can’t do it; no, sir! – impossible. Too much merit in the mines at this time. All will be up and “booming” in a day or two. Next time you shall see them go higher than they have yet been seen.

Our men who started in to make a fair profit might yet sell and double their money – much more than double it – but they are not going to do anything of the kind. They are going to wait till “things take a turn.” The “bulls” will soon make a grand rally, and when things go up again, our men will sell. They admit that they should have sold when their stocks were all up before, but never mind! they will go to the same figures again in less than a fortnight, when they will be sure to sell.

There does come a “spurt,” and for a day or two there is a cheering improvement in prices along the whole line. Faces brighten and everybody talks of all stocks going higher than ever.

All at once everything is again “soft,” the next day “softer,” and the next decidedly “off.” It is then said that someone in the “bear” interest has been telegraphing to the “Bay” (San Francisco) a pack of lies about the mines, and the “bears” “below” (at San Francisco) have made use of these lies to get up a “scare.” Never mind! the scare will be over in a day or two.

But stocks still go down. Then it is said that some big dealer is “unloading” and there is talk of a “crash.” Still our men who started in but to make a “fair profit” do not feel like taking thousands, when they might a short time before have taken tens of thousands of dol­lars. They still hold on, saying that even though one or two big deal­ers are unloading, the big men among the bulls will “stand in” and take all the stocks that are offered. Also, they will have some points from a friend “on the inside” and developments are about to be made in one or two of the mines that will make all who have sold “very sick,” particularly those bloodless demons who have “sold short.” The “shorts” will have a merry time of it when they come to “fill.”

Thus matters stand when suddenly there comes what looks very much like the beginning of a “crash.” The “bears” are all diligently crying: “Stand from under.” Many persons become frightened and throw their stocks upon the market. Down go prices and soon “soft” is no name for it. The masses – the tinker and the tailor, the preacher and the teacher, the hostler and the waiter – rush in to try to “save themselves” and there is seen a grand and unmistakable crash. Brokers are calling on all sides for “margins” to be “made good,” and men are rushing about trying to raise money to “put up” in order to prevent their stocks being sold at less than cost.

They perhaps raise the money required and for a few days breathe again, when there is a further decline in stocks, and the brokers are again sending notes to their customers telling them that if they do not put up more money they will be sold out. Sooner or later there comes a time when the customer can raise no more money, and his stocks are thrown into the market by the broker – in whose hands they re­main – and are sold. Thus ends the grand speculation.

Our men who at the start were resolved to be content with a fair profit are generally found among the number of those who are sold out, when they are heard to say that if they ever have another such chance to make money they will not hold on for the last cent. They have said the same thing year after year ever since the opening of the Comstock mines. But whenever there is a grand upward movement in stocks, they never fail to become excited and try to buy about ten times as much stock as they can pay for. In this way they lose all except what they may have happened to purchase at a fair price in a mine of real merit.

A friend forwarded me Orson Scott Card’s recent essay Would the Last Honest Reporter Please Turn On the Lights?, in which Card complains about journalistic bias (in this case, concerning the causes of the mortgage loan crisis).

Card writes:

If you had any personal honor, each reporter and editor would be insisting on telling the truth — even if it hurts the election chances of your favorite candidate.

Because that’s what honorable people do. Honest people tell the truth even when they don’t like the probable consequences. That’s what honesty means. That’s how trust is earned.

Card is a great science fiction writer (if you haven’t heard of him, go read Ender’s Game), but oddly, he seems to expect journalists to care about the truth.

I’m guessing he didn’t study journalism in school.

Professional journalists are trained to worry about “fairness”, not truth.  Reality, they are told, is socially constructed, and there is no such thing as objective truth.

Fairness means reporting “both sides” of a story even when there are 3 or 4 sides, or when it’s obvious who is lying and who isn’t.

If journalists were interested in truth, they wouldn’t pretend to be impartial (they’re human, of course they have opinions of their own).  Instead they’d openly admit their viewpoint and let the reader judge their arguments.

There are still countless newspapers in the US with “Republican” or “Democrat” in their title.  I suspect the relatively high esteem which journalists enjoy is a legacy from the era when these newspapers were founded.

Before the rise of “professional” journalism in the middle of the 20th century, truth was assumed to exist (even if it was difficult to find), and publishers were proud to announce their political allegiance.

Today NPR, that bastion of reasoned, intelligent and thoughtful reporting (as opposed to the crass celebrity-and-sensation commercial outlets) ran a typically panicky story about the documentary “Two Million Minutes”.

According to NPR, the film illustrates the looming downfall of American society as children in developing countries study and learn vastly more in school than their US counterparts. As a result, the next generation of Americans will be illiterate, innumerate, and utterly ignorant of science, history and geography. The sky will fall and Americans will be reduced to foot-washers and burger-cookers to Asian technocrats.

Two points.

First, economics is not a zero sum game. Other countries becoming more productive – even more productive than Americans are – does not hurt the US standard of living.

While it’s certainly true that American primary and secondary schools are pitiful (because they lack competition – compare America’s excellent, and highly competitive, colleges and universities), still, panic is not called for. Productivity determines living standards – nothing else. Americans are becoming more productive, not less, even if other countries are catching up.

Economics is not war. There are no “winners” and “losers” – everyone gets what they produce, be it great or small, and regardless of what others get.

It’s natural that countries like China and India, which still experience poverty that makes even the poorest Americans appear middle-class, are struggling very hard to improve their standard of living; much harder than Americans do or need to. This is admirable, but eventually when these countries catch up to first-world living standards undoubtedly they, too, will start taking some time to smell the flowers.

Second – education only goes so far. The brightest people will always be able to learn what they need to know without much effort, and the dumbest, sadly, will not be able to learn much no matter what effort is put into education. All nations have their share of genius and idiocy.