Month: July 2019

“The Rich Are Building Bunkers” – Jim Rickards Warns “Nothing Is Fixed”

Via Greg Hunter’s USAWatchdog.com,

Best-selling financial author James Rickards says “We are still in the aftermath of the 2008 – 2009 financial crisis.” In the up-coming book titled “Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos,” the crisis of the Great Recession may be over, but “nothing is fixed.”

Rickards explains, “I understand the economy has been expanding for 10 years, and we are not in a liquidity crisis at the moment and unemployment is low. We have come a long way from that. The fundamental problems that gave rise to that have not been solved…”

“So, unlimited guarantees, unlimited money printing and unlimited currency swaps and, yeah, they truncated the crisis, but all that happened was the bad debts, the leverage and the problems were now lifted up to the central bank level. You’ve got this progression. First, it is the hedge fund. Then, it’s Wall Street. Now, it’s the central banks. Who is going to bail out the central banks? That problem has not been solved, and it’s still on the table.”

Rickards says don’t think the Federal Reserve is going to come in and ride to the rescue in what Rickards is predicting to be a “coming chaos.” Rickards contends,

“Interest rates are 2.25%, but that is not what you need to get out of a recession. I am not predicting one, but if the U.S. economy went into a recession… history in economics says you need to cut interest rates 4% to 5% to get the U.S. out of a recession. How do you cut interest rates 4% when you are at 2.25%? You can’t because there is not enough room. You get to 0% pretty quickly, and now what do you do? You are still in a recession and you go to QE4 (money printing), but how do you do that when the Fed balance sheet is at $4 trillion. You are at a boundary. You are at a confidence limit. So, the Fed is not ready for the next recession, and they can’t get there.”

Rickards is not seeing a recession anytime soon. In fact, he is not forecasting a recession until after the 2020 Presidential Election. What does that mean for the chances of a second Trump Presidency? Rickards says,

“If you put recession odds at 35%, and that is probably high, then the inverse of 65% is his probability of winning. . . . Every month that goes by, the odds of a recession by next summer go down. So, the odds of Trump winning go up. . . . I don’t want to debate the economics of the Fed and what they are doing, but the Fed is doing what it needs to do to avoid a recession, and that improves Trump’s odds. Right now, I have Trump as the winner.”

After the 2020 Presidential Election, Rickards is much less optimistic and so are the wealthy elite.  Rickards says,

“The rich are building bunkers. Entrepreneurs are actually buying abandoned missile siloes with armed guards and steel doors…

Here’s another interesting thing, hedge fund billionaires may trade stocks, bonds and currencies all day long, but when you ask them where do you have your own money, every one of them that I have spoken to have gold, physical gold…They all have gold. They don’t trade it, but they have it.”

Rickards covers a lot of ground in this in-depth interview that is more than one hour in length. Rickards talks about the new gold (and silver) bull market, what everybody, especially the small investors, needs to buy now, and talks about a gold price that is exponentially higher than today’s price. Rickards discusses the world’s massive debt, probability of big defaults and huge inflation all coming in the “Aftermath” of the coming crisis. Rickards also tells people what they can do to protect themselves.”

Join Greg Hunter as he goes One-on-One with James Rickards, multiple best-selling author of a new book titled “Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos.”

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Trump Says Swedish PM “Assured Me That A$AP Rocky Will Be Treated Fairly”

In yet another series of tweets that thousands, maybe millions, of Americans will probably mistake for a meme-account photoshop job, President Trump confirmed Saturday morning that he had, in fact, spoken with the prime minister of Sweden, and assured him that rapper A$AP Rocky wasn’t a flight risk.

Roocky

A$AP Rocky

In fact, Trump said he personally offered to guarantee A$AP Rocky’s bail. Though Trump wasn’t able to secure Rocky’s bail immediately, Trump said he and the Swedish PM would be speaking again in two days to further discuss the situation.

As we reported yesterday, Trump revealed Friday night that he had spoken with Kanye West, who had urged him to intercede on fellow rapper A$AP Rocky’s behalf. Rocky has been locked up in a Swedish jail since July 5, after getting into a fight with two men outside a venue. Rocky is being charged with assault, and will be held for at least another week, after a Swedish judge deemed him a flight risk.

Since then, many celebrities, including the Kardashian-Wests, have reportedly been lobbying Trump and his senior aide and son-in-law Jared Kushner, to do something to help Rocky out. The White House is apparently making the situation a priority.

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We’ve Arrived At The End Of The Road

Authored by Adam Taggart via PeakProsperity.com,

Decades of central bank intervention have left us with an unavoidable insolvency crisis

When Richard Nixon closed the gold window in August 1971, fully severing the US dollar from its gold standard, the Federal Reserve and other world central banks found themselves liberated. No longer was their ability to provide liquidity constrained by the physical limitations of the gold supply.

The Fed started intervening more and more during times of slowing growth to goose the economy back to vigor. Cheered and further egged on by politicians happy for easy solutions and desperate to avoid having to make tough calls, central banks have been increasingly willing to provide liquidity in good times and bad.

Akin to removing the limit on a teenager’s credit card, with access to so much cheap money, the US went on a debt bender. One that has lasted for nearly half a century:

Here we stand today with the national debt at over $22 trillion, total US debt outstanding of $70 trillion (shown the above chart), and unfunded national liabilities of over $200 trillion. And we add to this every year with an annual deficit now exceeding $1 trillion.

This gigantic accretion of debt will never be repaid. And as the pile grows higher, the burden of servicing it — even at today’s historically low interest rates — is placing an increasingly heavy drag on economic growth.

To date, the central banks have gotten away with their easy money policies because they could. The day of reckoning could always be pushed further out via a fresh round of liquidity. But, as Brien Lundin says in the video below, the reckoning is “no longer simply inevitable, it is imminent. We are reaching the End of the Road.”

The Fed and its central banking brethren are now hostage to rock-bottom interest rates. They can’t raise them, less they asphyxiate the remaining shreds of GDP growth around the world. Especially now, when so much of the global economy is fast sliding into recession. Rate hikes at this point would simply crash the system.

So we can expect more unnatural and desperate measures from here. Fed rate cuts while the stock market is at all-time highs and employment at all-time lows? Sure. Negative interest rates on high yield (i.e. junk) bonds? It’s already happening in Europe.

But we shouldn’t expect these to work. The system has reached a point of debt exhaustion where each new $trillion stimulates much more weakly than the previous one, and causes the system to become exponentially more unstable.

Yet politically, there’s no appetite for anything other than “More liquidity!” to keep the status quo alive for as long as possible.

We’re already seeing the cracks appear. Gold, which serves as a mirror (or at least is supposed to when not intentionally suppressed) to reflect fiat currency devaluation, has decisively broken above its six-year ceiling price of $1,350/oz (trading as high as $1,450/oz last night).

Just this week, Ray Dalio issued a warning to the world about this impending crisis, advising investors that:

“I think (investments) that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant.”

So what does all this mean? What repercussions can we expect as we arrive at the End of the Road? What prudent investments fit Dalio’s criteria?

To address these important questions, Peak Prosperity partnered with Jefferson Financial and Benchmark Financial Services to assemble a team of economic, financial and legal experts to explain the unfolding situation and predict what to expect from here. The result is the 90-minute video presentation below.

Featured faculty for this video include Ted Siedle, national pension expert and recipient of the two largest-ever whistleblower settlements from the SEC and CFTC, Chris Martenson PhD, economic analyst and co-founder of PeakProsperity.com, and Brien Lundin, publisher of GoldNewsletter.com and producer of the world’s longest-running investment conference.

(Links to the resources mentioned in the video can be found here for New Harbor, Peak Prosperity, BenchmarkAlert.com, Gold Newsletter, and the New Orleans Investment Conference.)

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Orwell, Inc.: How Your Employer Spies On You From When You Wake Up Until You Go To Bed

An increasing number of large companies are using data from employees’ electronic devices to track such personal details like when you they wake up, where they go for coffee in the morning, their whereabouts throughout the entire day, and what time they go to bed according to a new Wall Street Journal article. What’s the company explanation for this type of spying?

“An increasing number of companies are keeping track of such information to flag potentially suspicious activity and measure work-life balance,” the article claims.

The article walks through the day in the life of a fictional worker, Chet. It starts by noting that his employer logs the time and his location when he first wakes up to check his e-mail in the morning.

From there, the company even sees as Chet logs onto the guest Wi-Fi connections at places like the coffee shop in the morning. Many companies require additional authentication when they try to access company information from unsecure Wi-Fi networks.

Then, a Bluetooth device and his ID badge mark what time he arrives at the office while tracking his movement around the building. These technologies are supposedly used to see what teams collaborate frequently and to make sure that employees aren’t accessing unauthorized areas.

Then, as Chet gets to his desk, his web browsing is tracked along with his email. New software breaks down how workers interact with email and how quickly colleagues reply in an attempt to see which employees are most influential. Some software on company computers even snaps screenshots every 30 seconds to evaluate productivity and hours worked.

Even Chet’s phone conversations can be recorded, transcribed and monitored. Companies use this information to find subject matter experts and measure productivity. Even conference room discussions and meetings can now be recorded and analyzed by software.

At the end of the day, if Chet goes to the gym or for a run, the company will know that too and just how many calories he has burned: his fitness tracker logs how many steps he takes and what exercise, if any, he is doing. Companies then use that information to determine how frequently employees are exercising and whether or not they should be paying for health and fitness services.

You can view the WSJ’s full animated panel here.

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The Planetary Insanity Of Eternal Economic Growth

Authored by Charles Hugh Smith via OfTwoMinds blog,

This is the fantasy: we can rebuild our entire global industrial society every generation or two forever.

“Earthrise” is one of the most influential photographs ever published. Taken on the Apollo 8 mission in late December 1968 by astronaut Bill Anders, it captures Earth’s uniqueness, isolation and modest scale: a blue and white dot on a vast sea of lifeless darkness.

The revelation that strikes me is the insanity of pursuing eternal economic growth, not as an option but as the only possible path: there is literally no alternative to extracting ever greater quantities of the planet’s resources to enable ever greater consumption by the planet’s 7.7 billion humans.

Stripped to its essence, this mad drive is about profit and power. The necessity is sold as the only path to prosperity for humanity, but it’s really about securing wealth and power for the few.

A recent article in Scientific American magazine highlights how the idealistic impulses of protecting the planet’s diverse life from the machinery of “growth” are inevitably subsumed by the necessity for profit: The Ecologists and the Mine.

Here’s what these kinds of articles never say: markets cannot price in the value of non-monetized natural assets such as diverse ecosystems. Whatever cannot be monetized right now is worthless, as markets lack any mechanism to price in what cannot be valued by market supply and demand in the moment.

There is no way to fix this fatal flaw in markets, and attempts to do so are merely excuses deployed to enable the profitable exploitation and resulting ruin.

(Recall that neoliberalism is the quasi-religious ideology of turning everything on Earth into a market, so it can be exploited and financialized by the few at the expense of the many.)

As for renewable energy: as my colleague Nate Hagens has observed, renewables are more properly called “rebuildables,” as solar panels, windmills, etc. don’t last forever but must be replaced every 20 years or so. Yes, dams last a long time, but solar panels, wind turbines, and all the other forms of “renewable” energy must be periodically replaced at enormous expense.

And where do the resources and energy come from to replace the immense base of “renewable” energy installations? From oil/natural gas and vast pit-mines.

As Chris Martenson noted in a recent conversation with me (paraphrasing his comment), “I’ll be impressed with renewable installations when they can power the fabrication of their replacements.”

This is the inconvenient reality few want to discuss publicly: none of the renewable energy sources is remotely capable of generating enough energy to smelt and mold industrial metals at scale, fabricate silicon wafers and so on.

The “eternal growth” model has dominated all political-economic ideologies for hundreds of years. When humanity first industrialized the planet, there were fewer than 1 billion humans. Now 7.7 billion humans all want the resource/energy intensive lifestyle of the developed-world middle class.

There is no way our planet has enough resources to provide all the goodies for 8 to 10 billion humans. We can’t even provide clean fresh water to 8 billion people, much less Roombas, electric vehicles, refrigerated medications, frozen spring rolls, door-to-door delivery of the latest gizmo and cheap flights to every corner of the globe.

The technological fantasy is that new efficiencies will magically make eternal growth possible. But all these fantasies overlook 1) that markets cause the destruction of everything that isn’t being monetized for profit in the moment; 2) that “renewable” energy all depends on cheap hydrocarbons in essentially limitless quantities and 3) that replacing everything every generation creates what my colleague Bart D. calls The Landfill Economy.

In other words, the tech “solution” to 500 million internal combustion engine (ICE) vehicles is to toss those 500 million vehicles in the landfill (recycling is a nice idea but not always financially practical) and then go mine the immense amounts of metals, minerals and hydrocarbons needed to built 500 million all-electric vehicles.

Then, in a generation, repeat the process, as “more efficient” vehicles are developed.

This is the fantasy: we can rebuild our entire global industrial society every generation or two forever, and fuel the entire process of replacement with hydrocarbons, essentially forever, and pay for it all with more debt.

The impossibility of this vision–a tech-enabled Landfill Economy that tells itself it’s “efficient” and “sustainable” because the full costs are never calculated, indeed, cannot be calculated in a market economy–is what drives me to keep working on an alternative socio-political-economic system, CLIME: the community-labor-integrated-money economy: A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

One glance at Earthrise informs us that the only sustainable path is DeGrowth: squandering far fewer resources on consumerist waste, a path that will spell the end of the current Landfill Economy of profit-driven eternal growth, and the entire financialization structure built on the Landfill Model that enriches the few at the expense of the many.

“Renewables/rebuildables” are a tiny sliver of global electrical generation, just enough to power the marketing of consumerist junk headed for the landfill.

Here’s the energy production of the World’s Workshop, i.e. China: “renewables/rebuildables” are a tiny sliver.

*  *  *

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Iran Releases First Footage Of Seized Oil Tanker

Iran has released the first images of the detained British flagged oil tanker Stena Impero after its Islamic Revolutionary Guard Corps (IRGC) announced its seizure Friday in retaliation for the UK’s prior capture of the ‘Grace 1’ off Gibraltar earlier this month. 

The Swedish-owned and British flagged tanker is also no longer under control of crew and hasn’t been able to be contacted since being forced into Iranian waters Friday, according to a statement from its owner Stena Bulk.

“Soon after the vessel was approached by unidentified small naval craft and a helicopter during her transit of the Strait of Hormuz in international waters… the vessel suddenly deviated from her passage to Jubail and headed north towards Iran,” the company said in statement. 

Iran’s IRNA quoted an Iranian maritime official as saying, “There are 18 Indian and five crew members from Russia, Philipines, Latvia and other countries on board of Stena Impero. The captain is Indian, but the tanker is UK-flagged.”   

As of Saturday morning Indian government officials have confirmed India is in contact with Tehran to secure the release of the majority Indian crew. 

via Sky News

Meanwhile, the second foreign vessel which was captured Friday – Liberian flagged, UK-owned tanker ‘Mesdar’ – was reportedly released after being briefly boarded by Iran’s military, as we detailed previously. 

UK Foreign Secretary Jeremy Hunt has warned Iran of “serious consequences” if its military does not return control of the British-flagged oil tanker Stena Impero, according to Sky News. He said British action will be “robust” but also emphasized “we’re not looking at military options” at this early stage.

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Scotch Whisky Makers Don’t Want a Virginia Distillery Using the Word ‘Whisky’

Last week a Scottish whisky association filed suit against a U.S.-based distiller over the latter’s use of the Scottish terms “whisky” and “Highland” on its labels. The suit was filed by the Scotch Whisky Association (SWA), a Scottish trade group that represents more than 9 out of every 10 of the world’s Scotch Whisky makers.

The SWA lawsuit, filed in U.S. District Court in Delaware, alleges the Virginia Distillery Company’s use of the term “Virginia-Highland Whisky” is false, misleading, and deceptive. Among its claims, the SWA alleges that Virginia Distillery Company’s marketing violates the Lanham Act, a law that governs trademarks and which I discussed at some length in a 2014 column. 

“Defendant’s prominent use of the term ‘Highland’ and its spelling of ‘Whisky,’ among other things, falsely indicates to the public that Defendant’s product is Scotch Whisky when it is not, and/or that it is whisky that originates in Scotland, which it does not,” the lawsuit states.

In a statement issued in the wake of the lawsuit, Virginia Distillery Company CEO Gareth A. Moore defended the company’s labeling and marketing.

“Our label clearly indicates the source of our whisky, stating ‘Whisky from Scotland, Married with Virginia Whisky,'” Moore writes of the company’s blend, “and we have always been upfront in descriptions to our customers.”

Any differences between whisky and whiskey (or Scotch, bourbon, rye, and other similarly distilled spirits) boil down largely to geographic and legal standards. “American-made and Irish-made spirits are traditionally spelled ‘whiskey’ while ‘whisky’ is used primarily in Scotland, England, Wales, Canada, Australia, and New Zealand and most areas of the United Kingdom,” a Daily Progress piece on the litigation explains.

The SWA acts as something of a protector of the realm, seeking “to sustain Scotch Whisky’s place as the world’s leading high-quality spirit drink.” The group pursues this goal by “protect[ing] Scotch Whisky from those who want to take advantage of its popularity by selling fake Scotch or trading unfairly on its reputation.” (The SWA also creates clever videos such as this one, which blends humor, Neil Diamond, and a wee dram of xenophobia to make its point that Scotch should only be made in Scotland.)

The SWA has gone after allegedly fake whisky makers for decades. A Whisky Advocate piece notes that whisky giant Dewar’s—itself an SWA member—ran afoul of the SWA several years ago by marketing a honey-infused whisky. The SWA alleged the product’s labeling—which included an accurate description of the bottle’s contents: “Dewar’s Blended Scotch Whisky Infused With Natural Flavors”—should not use the term “whisky” because U.K. rules don’t allow for the addition of anything to Scotch whisky, save for water and caramel coloring. Earlier this year, the SWA sued distiller Arkay over the company’s seemingly novel “alcohol-free whisky flavored drink.”

The role of the SWA is therefore similar to (likely) hundreds of other origin-centered food trade groups, including, for example, the Parmigiano-Reggiano Consortium, which promotes “the defen[s]e and protection” of the cheese’s Italian origins.

From a purely legal standpoint, the SWA suit would appear to have a good case. U.S. regulations, the lawsuit notes, declare “Scotch whisky” (though not necessarily “whisky from Scotland”) to be “whisky which is a distinctive product of Scotland, manufactured in Scotland in compliance with the laws of the United Kingdom regulating the manufacture of Scotch whisky for consumption in the United Kingdom.” These same rules also state “‘Highlands’ and similar words connoting, indicating, or commonly associated with Scotland, shall not be used to designate any product not wholly produced in Scotland.” And U.K. rules, the lawsuit also notes, require “Scotch Whisky” to have been “produced in Scotland.”

Even if the rules appear to be on the side of the SWA, should they be? As I’ve long argued, including in my recent book Biting the Hands that Feed Us, standards of identity tend to protect large incumbent producers, stifle innovation and competition, and harm consumers.

Whisky producers in Scotland have chafed at the country’s ossified regulations and resultant stymying of innovation. Whisky Advocate reported last year that Diageo, the alcohol giant that owns several of the leading distilleries in Scotland (along with Irish brewer Guinness and many other leading brewers, vintners, and distillers), had created “a ‘secret task force’ last year to determine how Scotch whisky is ‘constrained’ in regulatory, legal, technical, and other ways, and to explore the ‘scope for reform.'”

The Scotch Whisky Association is well within its rights to sue in order to force competitors to play by the rules. But if some of the SWA’s leading members think the rules stink—and they do—then the SWA could and should find a different path forward.

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Banned China-Made Surveillance Tech Still Operational At Sensitive US Bases

Despite the headlines and scrutiny of US officials focused on Chinese multinational tech giant Huawei, the United States military continues to purchase China-made surveillance cameras, even installing them at sensitive bases like the headquarters of Air Force Space Command and North American Aerospace Defense Command (NORAD), according to bombshell Financial Times report this week. 

US law will ban military and government agencies from purchasing the Chinese manufactured equipment starting in August, but the FT investigation found that hundreds of thousands of dollars worth of the potentially compromising surveillance and monitoring components are still being installed in US bases. As the report points out, “China-made surveillance cameras are still watching over US military bases.”

The scene at the NORAD entrance in Cheyenne Mountain, site of NORAD’s previous HQ before moving to Peterson Air Force Base. Image source: US Air Force.

FT introduced its report with a deeply alarming example at none other than the ground zero location for the agency responsible for defending American and Canadian airspace:

Cameras made by Hikvision, which is 42 per cent owned by the Chinese government, remain in place at the Peterson Air Force Base in Colorado, the home of North American Aerospace Defense Command (Norad) and the headquarters of Air Force Space Command. The Peterson base spent $112,000 on Hikvision cameras in 2016 and a spokesperson said these were “not associated with base security or classified areas”…

US defense officials at this and other bases justified the procurement by saying the cameras wouldn’t be connected to the internet, nor would they be used in classified or sensitive areas. 

Critics worry that the Chinese government could use software in the cameras to spy on America’s most secretive military installations, especially following mounting evidence that Chinese intelligence and the People’s Liberation Army (PLA) are using Huawei products, specifically its next generation 5G wireless network, as a Trojan horse backdoor to access other nations’ secrets. 

Source: South China Morning Post

Other examples of the US military recently using Chinese tech devices “in plain site” at national security related facilities include the following, according to the FT report:

  • A US Navy research base in Orlando, Florida, bought $4,000 of Hikvision cameras even after the passage last year of the National Defense Authorization Act (NDAA)…
  • Police departments in states including Massachusetts, Colorado and Tennessee are also still relying on Hikvision cameras. The Memphis Police Department alone has at least 1,500.
  • The US state department bought more than $20,000-worth of replacement Hytera radio parts for the US embassy in Guatemala, again after the NDAA was passed — as part of its work with the Policía Nacional Civil.
  • In 2017, an army memo said Hytera radios were being used for special forces training since the brand was “extensively used by Islamic State”.
  • The Fort Drum army base, which acquired $30,000-worth of Hikvision cameras in June 2018, declined to comment.
  • Since 2015, the Defense Logistics Agency has spent almost $180,000 on Hikvision cameras, for US forces in Korea and a naval base in Florida.
  • In January 2018, the US army removed Hikvision cameras from Fort Leonard Wood, a base in Missouri, amid cyber security fears, according to the Wall Street Journal newspaper.

Interestingly, in a number of cases the decision to remove China-produced tech items at government facilities was due merely to concern over public perception amid the Huawei scandal.

“We never believed [the cameras] were a security risk. They were always on a closed network,” Col. Christopher Beck, at Missouri’s Fort Leonard base told the WSJ. He added the base removed the cameras to avoid “any negative perception.”

Considering China-made cameras and related surveillance gear make up some one-third of the global market, according to many estimates, might they be impossible for the United States to remove completely? 

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Scotch Whisky Makers Don’t Want a Virginia Distillery Using the Word ‘Whisky’

Last week a Scottish whisky association filed suit against a U.S.-based distiller over the latter’s use of the Scottish terms “whisky” and “Highland” on its labels. The suit was filed by the Scotch Whisky Association (SWA), a Scottish trade group that represents more than 9 out of every 10 of the world’s Scotch Whisky makers.

The SWA lawsuit, filed in U.S. District Court in Delaware, alleges the Virginia Distillery Company’s use of the term “Virginia-Highland Whisky” is false, misleading, and deceptive. Among its claims, the SWA alleges that Virginia Distillery Company’s marketing violates the Lanham Act, a law that governs trademarks and which I discussed at some length in a 2014 column. 

“Defendant’s prominent use of the term ‘Highland’ and its spelling of ‘Whisky,’ among other things, falsely indicates to the public that Defendant’s product is Scotch Whisky when it is not, and/or that it is whisky that originates in Scotland, which it does not,” the lawsuit states.

In a statement issued in the wake of the lawsuit, Virginia Distillery Company CEO Gareth A. Moore defended the company’s labeling and marketing.

“Our label clearly indicates the source of our whisky, stating ‘Whisky from Scotland, Married with Virginia Whisky,'” Moore writes of the company’s blend, “and we have always been upfront in descriptions to our customers.”

Any differences between whisky and whiskey (or Scotch, bourbon, rye, and other similarly distilled spirits) boil down largely to geographic and legal standards. “American-made and Irish-made spirits are traditionally spelled ‘whiskey’ while ‘whisky’ is used primarily in Scotland, England, Wales, Canada, Australia, and New Zealand and most areas of the United Kingdom,” a Daily Progress piece on the litigation explains.

The SWA acts as something of a protector of the realm, seeking “to sustain Scotch Whisky’s place as the world’s leading high-quality spirit drink.” The group pursues this goal by “protect[ing] Scotch Whisky from those who want to take advantage of its popularity by selling fake Scotch or trading unfairly on its reputation.” (The SWA also creates clever videos such as this one, which blends humor, Neil Diamond, and a wee dram of xenophobia to make its point that Scotch should only be made in Scotland.)

The SWA has gone after allegedly fake whisky makers for decades. A Whisky Advocate piece notes that whisky giant Dewar’s—itself an SWA member—ran afoul of the SWA several years ago by marketing a honey-infused whisky. The SWA alleged the product’s labeling—which included an accurate description of the bottle’s contents: “Dewar’s Blended Scotch Whisky Infused With Natural Flavors”—should not use the term “whisky” because U.K. rules don’t allow for the addition of anything to Scotch whisky, save for water and caramel coloring. Earlier this year, the SWA sued distiller Arkay over the company’s seemingly novel “alcohol-free whisky flavored drink.”

The role of the SWA is therefore similar to (likely) hundreds of other origin-centered food trade groups, including, for example, the Parmigiano-Reggiano Consortium, which promotes “the defen[s]e and protection” of the cheese’s Italian origins.

From a purely legal standpoint, the SWA suit would appear to have a good case. U.S. regulations, the lawsuit notes, declare “Scotch whisky” (though not necessarily “whisky from Scotland”) to be “whisky which is a distinctive product of Scotland, manufactured in Scotland in compliance with the laws of the United Kingdom regulating the manufacture of Scotch whisky for consumption in the United Kingdom.” These same rules also state “‘Highlands’ and similar words connoting, indicating, or commonly associated with Scotland, shall not be used to designate any product not wholly produced in Scotland.” And U.K. rules, the lawsuit also notes, require “Scotch Whisky” to have been “produced in Scotland.”

Even if the rules appear to be on the side of the SWA, should they be? As I’ve long argued, including in my recent book Biting the Hands that Feed Us, standards of identity tend to protect large incumbent producers, stifle innovation and competition, and harm consumers.

Whisky producers in Scotland have chafed at the country’s ossified regulations and resultant stymying of innovation. Whisky Advocate reported last year that Diageo, the alcohol giant that owns several of the leading distilleries in Scotland (along with Irish brewer Guinness and many other leading brewers, vintners, and distillers), had created “a ‘secret task force’ last year to determine how Scotch whisky is ‘constrained’ in regulatory, legal, technical, and other ways, and to explore the ‘scope for reform.'”

The Scotch Whisky Association is well within its rights to sue in order to force competitors to play by the rules. But if some of the SWA’s leading members think the rules stink—and they do—then the SWA could and should find a different path forward.

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The Apollo Missions Were Cool, But Private Enterprise Has Been Better for Innovation

Fifty years ago, Apollo 11 fulfilled President John F. Kennedy’s 1961 promise to land Americans on the Moon. It was exactly the sort of project at which government was supposed to excel: a grand endeavor with no immediate payoff harnessing the resources of an entire nation.

Arguably, all it really demonstrated was that, if you could mug the taxpayers of an extremely wealthy nation to fund a scheme with no obvious benefit, you could orchestrate history’s coolest photo opportunity and show up those damned Russkies.

Some people mourn the end of the Apollo era as the end of heroic projects. It’s more accurate to say that it was the end of federal dominance of the public image of innovation and the dawn of an era of lower-profile but more-beneficial developments that improve human health, happiness, and wealth.

More beneficial? But didn’t the space program give us Tang? Actually, no—the stuff was already around, just not particularly popular until NASA made the astronauts drink it. But sure, let’s give NASA credit for marketing drink mix (it’s got the electrolytes Moon rocks crave!).

The private sector, on the other hand, has transformed the world around us with communications technology, computers, medicines and medical devices, and innovations in biotechnology. I’m probably missing something there, so feel free to email or tweet my oversight to me (in Apollo days, you’d have had to entrust your jabs to the government mail or a federally guaranteed telephone monopoly).

These transformations come courtesy of a host of sources, some involving government endeavors, many purely private, and others conflating the two—especially when it comes to defense spending, which has flowed in copious quantities over the years to many takers.

Increasingly, the researchers changing and improving the world in which we live do so for private businesses and independent organizations, seeking to solve specific problems or meet the perceived needs of consumers.

“U.S. [research and development] funding reached an all-time high of $499 billion in 2015,” according to estimates from the National Science Foundation‘s National Center for Science and Engineering. “This will represent the largest amount the U.S. or any nation has ever spent on R&D in a single year,” reported the American Institute of Physics (AIP) in 2016.

Of that $499 billion, “the federally sponsored share fell to a record-low 23 percent while the business sector’s share rose to a record-high 69 percent,” AIP noted. The federal government’s share of spending was at its lowest level since 1953, the year the National Science Foundation started measuring.

In 2016, the private sector funded 73 percent of U.S. research and development—$374.7 billion of $515.3 billion—the National Science Foundation announced earlier this year.

Meanwhile, the world has morphed in recent years in strange and interesting ways that may not be as dramatic as a Moon landing but are at least as important. These changes are apparent from the fact that I’m typing this article on a laptop computer on the back patio of my rural Arizona home. When finished, I’ll transmit it almost instantaneously to my editor in Washington, D.C. As I work, I’m doing my best to ignore the noisy endeavors of my teenage son, who himself is a result of fertility treatments unavailable a few decades ago and who has acquired most of his education remotely, using a variety of lessons and resources available to him far from any traditional classroom.

Even the internet that makes much of this possible and is sometimes credited to government is more accurately described as the result of a private efforts building on earlier public initiatives, with heavy emphasis on entrepreneurialism departing from and prevailing over Defense Department priorities.

Not everything new and cool is sitting on or near my patio table, though.

The world around us would be almost unimaginable—for good or ill—without cell phones. Lots of people contributed to the development of the technology, but the final spur came from rivalry between engineers at Bell Laboratories and Motorola. “Joel, this is Marty. I’m calling you from a cellphone, a real, handheld, portable cellphone,” Motorola’s Marty Cooper reportedly boasted to his rival, Bell’s Joel Engel, in the very first public call, placed as reporters looked on.

Golden rice, which started as a Rockefeller Foundation initiative, “has the potential to reduce or eliminate much of the death and disease caused by a vitamin A deficiency,” according to a letter signed by 144 Nobel Laureates. The modified rice is prominent among the low-key but potentially world-changing developments of the biotechnology revolution in general, and genetically modified organisms in particular.

Perhaps less important in terms of biotechnology, but still intriguing, is the looming challenge to vegans: is lab-grown meat ethically acceptable? The schism should be GMO popcorn-worthy.

3D printing has picked up buzz since the 1980s as a means of lowering manufacturing costs, speeding production—especially of prototypes and small runs—and evading government restrictions. “The simplicity and low cost of [3D printing] machines, combined with the scope of their potential creations, could profoundly alter global and local economies and affect international security,” the RAND Corporation noted last year.

Tellingly, as the innovations accumulate and transform society, the world is becoming more prosperous, with per-capita income soaring over recent decades (nope—no post-Apollo slump!) in an important break from agonizingly slow historical gains.

“The speed of poverty alleviation in the last 25 years has been historically unprecedented,” Alexander C. R. Hammond wrote in 2017 for the Foundation for Economic Education. “Not only is the proportion of people in poverty at a record low, but, in spite of adding 2 billion to the planet’s population, the overall number of people living in extreme poverty has fallen too.”

Economic liberalization—free markets—get much of the credit for this. Freer markets have opened the floodgates of innovation, research, and development. As a result, “agricultural productivity has greatly improved due to more scientific methods of farming, access to plentiful and much improved fertilisers and pesticides, and new high-yield and disease-resistant plants,” Marian Tupy pointed out last year for CapX.

Yeah, maybe it’s not as overtly heroic as a Moon landing. But people are healthier, happier, and wealthier because of these and myriad other private innovations, inspiring and building on one another.

And yes, that applies to space exploration, too. Recent innovations in launch vehicles and reusable craft come courtesy of private innovators. You can even get spectacle, if that’s what you want, in the form of the Tesla Roadster and mannequin “astronaut” that SpaceX launched into the interplanetary void.

Sure, that was pure marketing, just like the culmination of the original space race. But it was marketing done with the company’s own money. And it was viewed across the world on a host of devices invented and improved by private initiative in the 50 years since the Apollo astronauts took those first steps on the Moon.

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