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The Gloom, Boom & Doom Report
ISSN 1017-1371
A PUBLICATION OF MARC FABER OVERSEAS LIMITED
SEPTEMBER 1, 2015
SEPTEMBER 2015 REPORT
Socialism is the Abolition of Free Markets and
an Incentive-driven Economy
“There is a popular cliché, deeply beloved by conservatives,
that socialism and communism are the cause of a low
standard of living. It is much more nearly accurate to say
that a low and simple standard of living makes socialism
and communism feasible.”
J.K. Galbraith
“The underlying motive of so many Socialists, I believe, is
simply a hypertrophied sense of order. The present state of
affairs offends them not because it causes misery, still less
because it makes freedom impossible, but because it is
untidy; what they desire, basically, is to reduce the world to
something resembling a chessboard.”
George Orwell
“Socialism is the society which grows directly out of
capitalism.”
V.I. Lenin
“Capitalists … would welcome any commercial
reorganization which would bring them a calmer life. It is,
we believe, not as a remedy for the miseries of the poor,
but rather as an alleviation of the cares of the rich, that
Socialism is coming upon us.”
Reverend William Cunningham
INTRODUCTION
A recurring theme of this report
is that the global economy is not
healing but is instead slowing down,
for several reasons. In the Western
world and in Japan, the headwinds
for sustainable growth are largely
caused by governments’ interventions
through fiscal and monetary policies.
In Asia and emerging economies
around the world the slowdown of the
Chinese economy, which has caused
industrial commodities to slump, is
being felt badly. Some economists
will blame slower structural growth
on the aging population, global
warming (or cooling) (who knows?),
illegal immigrants, increased social
benefits, and other factors, but the
root of the problem lies in larger and
larger governments as a percentage
of the economy, brought about by
expansionary fiscal policies. These
policies have led to excessive debt
and irresponsible monetary policies,
creating a series of bubbles. All these
factors are interconnected, resulting
in poor productivity growth, more and
more socialistic policies, and slow — or
no — economic growth.
THE CAUSES OF POOR
PRODUCTIVITY
A few years ago, I discussed the work
of the late Professor Richard Gordon
on why productivity had slowed down;
and in the May 2015 GBD report,
entitled “The Most Dangerous Thing
about Interventions and Regulation
is to Employ Them Where They Are
Not Applicable”, I quoted a study
by John W. Dawson (Department
of Economics, Appalachian State
University) and John J. Seater
(Department of Economics, North
Carolina State University) published
in the June 2013 issue of the Journal
of Economic Growth, entitled “Federal
Regulation and Aggregate Economic
Growth”. The gist of Dawson and
Seater’s study was as follows:
Changes in regulation offer a
straightforward explanation
for the productivity slowdown
of the 1970s. Qualitatively and
quantitatively, our results agree
with those obtained from crosssection and panel measures of
regulation using cross-country
data.… Regulation has allocative
effects, changing the mix of
factors used to produce output.
Regulation’s overall effect on
output’s growth rate is negative
and substantial. Federal
regulations added over the past
fifty years have reduced real
output growth by about two
percentage points on average
over the period 1949–2005. That
reduction in the growth rate has
led to an accumulated reduction
in GDP of about $38.8 trillion