Finance

Common Sense for Black Friday

By David Stockman  |  November 23, 2018

IN the following pages I offer nothing more than simple facts, plain arguments, and common sense…

– Thomas Paine, Common Sense (1776)

Benjamin Franklin sent Thomas Paine from London to Philadelphia in September 1774.

If he had an inkling of it, there’s still no way the elder statesman could have anticipated the magnitude of the impact the “corset-maker” would have on American independence.

Here, today, for your post-Thanksgiving digesting pleasure are excerpts from Paine’s seminal pamphlet on what it means to be “American,” Common Sense, published on January 10, 1776.

Introduction

PERHAPS the sentiments contained in the following pages, are not yet sufficiently fashionable to procure them general favor; a long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defence of custom. But the tumult soon subsides. Time makes more converts than reason.

As a long and violent abuse of power, is generally the Means of calling the right of it in question (and in Matters too which might never have been thought of, had not the Sufferers been aggravated into the inquiry) and as the King of England hath undertaken in his own Right, to support the Parliament in what he calls Theirs, and as the good people of this country are grievously oppressed by the combination, they have an undoubted privilege to inquire into the pretensions of both, and equally to reject the usurpation of either…

The cause of America is in a great measure the cause of all mankind. Many circumstances have, and will arise, which are not local, but universal, and through which the principles of all Lovers of Mankind are affected, and in the Event of which, their Affections are interested. The laying of a Country desolate with Fire and Sword, declaring War against the natural rights of all Mankind, and extirpating the Defenders thereof from the Face of the Earth, is the Concern of every Man to whom Nature hath given the Power of feeling; of which Class, regardless of Party Censure, is the AUTHOR.

Of the origin and design of government in general…

SOME writers have so confounded society with government, as to leave little or no distinction between them; whereas they are not only different, but have different origins. Society is produced by our wants, and government by wickedness; the former promotes our happiness positively by uniting our affections, the latter negatively by restraining our vices. The one encourages intercourse, the other creates distinctions. The first is a patron, the last a punisher.

Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one; for when we suffer, or are exposed to the same miseries by a government, which we might expect in a country without government, our calamity is heightened by reflecting that we furnish the means by which we suffer. Government, like dress, is the badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise. For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest; and this he is induced to do by the same prudence which in every other case advises him out of two evils to choose the least. Wherefore, security being the true design and end of government, it unanswerably follows that whatever form thereof appears most likely to ensure it to us, with the least expence and greatest benefit, is preferable to all others…

Of monarchy and hereditary succession.

MANKIND being originally equals in the order of creation, the equality could only be destroyed by some subsequent circumstance; the distinctions of rich, and poor, may in a great measure be accounted for, and that without having recourse to the harsh ill sounding names of oppression and avarice. Oppression is often the consequence, but seldom or never the means of riches; and though avarice will preserve a man from being necessitously poor, it generally makes him too timorous to be wealthy.      

But there is another and greater distinction for which no truly natural or religious reason can be assigned, and that is, the distinction of men into KINGS and SUBJECTS. Male and female are the distinctions of nature, good and bad the distinctions of heaven; but how a race of men came into the world so exalted above the rest, and distinguished like some new species, is worth enquiring into, and whether they are the means of happiness or of misery to mankind….

To the evil of monarchy we have added that of hereditary succession; and as the first is a degradation and lessening of ourselves, so the second, claimed as a matter of right, is an insult and an imposition on posterity. For all men being originally equals, no one by birth could have a right to set up his own family in perpetual preference to all others for ever, and though himself might deserve some decent degree of honors of his contemporaries, yet his descendants might be far too unworthy to inherit them. One of the strongest natural proofs of the folly of hereditary right in kings, is, that nature disapproves it, otherwise, she would not so frequently turn it into ridicule by giving mankind an ass for a lion…

But it is not so much the absurdity as the evil of hereditary succession which concerns mankind. Did it ensure a race of good and wise men it would have the seal of divine authority, but as it opens a door to the foolish, the wicked, and the improper, it hath in it the nature of oppression. Men who look upon themselves born to reign, and others to obey, soon grow insolent; selected from the rest of mankind their minds are early poisoned by importance; and the world they act in differs so materially from the world at large, that they have but little opportunity of knowing its true interests, and when they succeed to the government are frequently the most ignorant and unfit of any throughout the dominions…

In short, monarchy and succession have laid (not this or that kingdom only) but the world in blood and ashes. ’Tis a form of government which the word of God bears testimony against, and blood will attend it…

Thoughts on the present state of American affairs.

IN the following pages I offer nothing more than simple facts, plain arguments, and common sense; and have no other preliminaries to settle with the reader, than that he will divest himself of prejudice and prepossession, and suffer his reason and his feelings to determine for themselves; that he will put on, or rather that he will not put off, the true character of a man, and generously enlarge his views beyond the present day.     

Volumes have been written on the subject of the struggle between England and America. Men of all ranks have embarked in the controversy, from different motives, and with various designs; but all have been ineffectual, and the period of debate is closed. Arms, as the last resource, decide the contest; the appeal was the choice of the king, and the continent hath accepted the challenge…

The sun never shined on a cause of greater worth. ’Tis not the affair of a city, a country, a province, or a kingdom, but of a continent – of at least one eighth part of the habitable globe. ’Tis not the concern of a day, a year, or an age; posterity are virtually involved in the contest, and will be more or less affected, even to the end of time, by the proceedings now. Now is the seed time of continental union, faith and honor…

But where says some is the King of America? I’ll tell you Friend, he reigns above, and doth not make havoc of mankind like the Royal Brute of Britain. Yet that we may not appear to be defective even in earthly honors, let a day be solemnly set apart for proclaiming the charter; let it be brought forth placed on the divine law, the word of God; let a crown be placed thereon, by which the world may know, that so far as we approve as monarchy, that in America THE LAW IS KING. For as in absolute governments the King is law, so in free countries the law ought to be King; and there ought to be no other. But lest any ill use should afterwards arise, let the crown at the conclusion of the ceremony be demolished, and scattered among the people whose right it is…

Of the present ability of America, with some miscellaneous reflections.

Youth is the seed time of good habits, as well in nations as in individuals. It might be difficult, if not impossible, to form the Continent into one government half a century hence. The vast variety of interests, occasioned by an increase of trade and population, would create confusion. Colony would be against colony. Each being able might scorn each other’s assistance; and while the proud and foolish gloried in their little distinctions, the wise would lament, that the union had not been formed before. Wherefore, the present time is the true time for establishing it. The intimacy which is contracted in infancy, and the friendship which is formed in misfortune, are, of all others, the most lasting and unalterable. Our present union is marked with both these characters: we are young, and we have been distressed; but our concord hath withstood our troubles, and fixes a memorable area for posterity to glory in.          

The present time, likewise, is that peculiar time, which never happens to a nation but once, viz. the time of forming itself into a government. Most nations have let slip the opportunity, and by that means have been compelled to receive laws from their conquerors, instead of making laws for themselves. First, they had a king, and then a form of government; whereas, the articles or charter of government, should be formed first, and men delegated to execute them afterwards: but from the errors of other nations, let us learn wisdom, and lay hold of the present opportunity – To begin government at the right end.

Appendix

I shall conclude these remarks, with the following timely and well-intended hints. We ought to reflect, that there are three different ways, by which an independancy may hereafter be effected; and that one of those three, will one day or other, be the fate of America, viz. By the legal voice of the people in Congress; by a military power; or by a mob: It may not always happen that our soldiers are citizens, and the multitude a body of reasonable men; virtue, as I have already remarked, is not hereditary, neither is it perpetual. Should an independancy be brought about by the first of those means, we have every opportunity and every encouragement before us, to form the noblest purest constitution on the face of the earth. We have it in our power to begin the world over again. A situation, similar to the present, hath not happened since the days of Noah until now. The birthday of a new world is at hand…

A Better Plan

It’s starting to look like Wall Street is waking up to the fact that the Federal Reserve has its own self-interest in mind and will continue with “normalization” until it feels like it has enough “dry powder” to ride to the rescue amid the next crisis of its own creation.

We may see some fits of short-term buying that create things like thousand-point intraday swings, which can be frightening… for “buy and hold” investors.

I have a different approach, one that combines strategy and tactics into a plan flexible enough for you to survive and thrive amid the Mother of All Yield Shocks.

About a decade ago Wall Street was desperate for a bailout. Imperial Washington gave it up, again.

The Federal Reserve is fixing to do the same on behalf of its ultimate masters – to save Wall Street and the Acela Corridor elite, again…

But it’ll only be ready to step in once the asset prices it inflated implode… once CEOs and CFOs it enabled hack off jobs and factories to get back in line with expectations…

Chairman Powell is not going to rescue Main Street, and he’s not going to rescue you.

Our “survive and thrive” plan includes specific asset types and allocations by percentage. But it’s built to suit your approach to the market.

And we will include tactical notes on particular vehicles that will help us accomplish our twin goals of protecting wealth and profiting opportunistically.

Take a look – before the chaos of the Mother of All Yield Shocks – at The Stockman Letter and “The Stockman Model.”

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR