Deep Thoughts In Sin City

• Declining church attendance = higher death rates
• Mass formation: A frightening form of mob psychology
• No faith, no family, no freedom
• This headline is not bullish
• The Mailbag: A downside to dividends?

Declining Church Attendance = Higher Death Rates

Greetings from somewhere over the Great Plains. Your editor is en route to Las Vegas — where tomorrow the 2023 Paradigm Shift Summit will convene at the Bellagio.

During this one-day event, each of our top editors will deliver talks to a gathering of your fellow readers, about 500 in all. Our theme this year is a little cheesy, but totally appropriate to our venue — “Don’t Bet on the Dollar.”

We’ll share some highlights later in the week. Today, meanwhile, we revisit some thought-provoking reflections from earlier this year, along with the day’s market-moving developments and the mailbag. Let’s go…

It’s a phenomenon we’ve bemoaned now and then over the years — so-called “deaths of despair” from suicide and substance abuse.

In 2015, Princeton economists Angus Deaton and Anne Case found that the death rate among white Americans ages 25–54 with no more than a high school education had nearly doubled in only 15 years.

Deaths of despair were the reason that overall life expectancy in the United States was already in decline several years before COVID-19 came along.

The reasons are economic — but not exclusively so.

As Case explained to NPR in 2017, "They don't have a good job. They don't have a marriage that supports them. They may have children that they do or don't see. They have a much more fragile existence than they would have had a generation ago…

"It may be the deaths from drugs, from suicide, from alcohol are related to the fact that people don't have the stability and a hope for the future that they might have had in the past.”

In January, a paper circulated by the National Bureau of Economic Research zeroed in on one factor — declining church attendance.

As MarketWatch reported, “The authors noted that many measures of religious adherence began to decline in the late 1980s. They find that the large decline in religious practice was driven by the group experiencing the subsequent increases in mortality: white middle-aged Americans without a college degree.

“States that experienced larger declines in religious participation in the last 15 years of the 20th century saw larger increases in deaths of despair.”

Ture, correlation does not equal causation; wet sidewalks don’t cause rain.

But surely there’s something to the general idea that people start to lose their moorings in the absence of strong families, strong churches, strong communities.

“Mass Formation” — a Frightening Form of Mob Psychology

And we’re not talking about just substance abuse and suicide. We’re talking about the entire upending of economic and personal life with the advent of COVID-19.

In that spring of 2020, a psychology professor at the University of Ghent in Belgium named Mattias Desmet started thinking long and hard about the link.

In addition to psychology, Desmet has a background in statistics. He reviewed the apocalyptic computer models from epidemiologist Neil Ferguson at Imperial College London — the ones that prompted lockdown measures in both the United Kingdom and the United States.

Thing is, the models weren’t panning out. Ferguson projected nearly 85,000 deaths in Sweden — which famously did not lock down. In the event, the number was less than one-sixth of that total.

And yet… legions of people in one country after another embraced lockdown. Welcomed it. Couldn’t get enough of it. Shrieked in horror at the thought of reopening schools or shedding masks or — for that matter — allowing others to gather in churches.

The name Desmet gave to this phenomenon is “mass formation.”

➢ In the interest of accuracy: You might have run across articles or interviews online referring to “mass formation psychosis.” That is not Desmet’s term. Others have tacked on that last word. Desmet is describing a social phenomenon, not diagnosing a psychological condition. It’s an important distinction… because the pro-lockdown Establishment media have published a handful of irksome “fact checking” articles making straw-man arguments to the effect of There’s no entry for “mass formation psychosis” in the DSM, therefore it doesn’t exist!

As Desmet explains it, there are four preconditions to mass formation. And the first is — drumroll, please — a lack of social bonds.

You know, the sort of bonds that come from family and church and community.

Here, Desmet drew in part on the work of the political theorist Hannah Arendt, who studied the willingness of everyday Germans to go along with the Nazis’ depredations: “The chief characteristic of the mass man is not brutality and backwardness,” Arendt wrote, “but his isolation and lack of normal social relationships.”

There are three other preconditions…

• A lack of meaning in life, particularly a lack of meaningful work. Think overeducated millennials working as baristas and Uber drivers

• Free-floating anxiety, the type of anxiety that’s not connected to anything in particular. It has no concrete target like, say, economic distress or natural disaster

• Frustration and aggression, again not directed at anything specific — but adding to the sense of being out of control.

“What accelerates mass formation,” Desmet writes in his 2022 book The Psychology of Totalitarianism, “is not so much the frustration and aggression that are effectively vented, but the potential of unvented aggression present in the population — aggression that is still looking for an object.”

Then when something like a pandemic comes along… suddenly these people have a sense of meaning that wasn’t there before. In the absence of meaningful social bonds, they allow themselves to be subsumed into a collective.

Desmet’s analogy is a crowd singing at a soccer stadium: “The voice of the individual dissolves into the overwhelming, vibrating group voice; the individual feels supported by the crowd and ‘inherits’ its vibrating energy. It doesn’t matter what song or lyrics are sung; what matters is that they are sung together.”

And God help anyone who marches to a different tune.

To be sure, mass formation doesn’t tell the whole story of what happened in early 2020.

The American expat writer C.J. Hopkins is extremely critical of Desmet. To Hopkins’ mind, the story is emphatically not about everyday people collectively losing their bearings.

“It is the story of the radical restructuring of society based on lies and official propaganda, executed, globally, through sheer brute force and systematic psychological conditioning,” he writes. “It is the story of the implementation of our new totalitarian global-capitalist ‘reality’ … the ‘New Normal’ that was announced in the spring of 2020.”

From where we sit, the arguments are not mutually exclusive: Yes, the power elite carried out a radical top-down restructuring of society. But it couldn’t have happened without that critical mass of people — Desmet’s estimate is about 20–30% of the population — who were predisposed to comply.

No Faith? No Family? No Freedom

As we see it, 2020 illustrates a truism: The absence of strong families, strong churches and strong communities creates a vacuum — a vacuum that’s inevitably filled by the state.

This was one of the central insights of the 20th-century sociologist Robert Nisbet. He observed that in the year of his birth — 1913 — the only contact most Americans had with the federal government was the Post Office.

But the control freaks and power trippers of the progressive movement acted quickly — the Federal Reserve, the income tax, the nationalization of industry during World War I.

Nisbet’s 1953 book The Quest for Community laments how the burgeoning federal government undermined those “intermediate social institutions” like family and church that lent meaning to social life. As those institutions weakened, “loose individuals” became ever more dependent on the state.

A little over a century later… well, here we are.

What to do? Defy the narrative, says Desmet. It’s the only way.

Because good luck trying to topple the elites. Even if you somehow succeeded, as long as mass formation is in play, “it will recreate the same elite time and time again,” Desmet says in his Epoch Times interview.

“If we can start with thinking a different way, we will see that a new elite is formed and that the elite that exists now will cease to exist in a spontaneous way.”

No, that’s not an instantaneous process. But we daresay it might start with something as simple as forging new social bonds that weren’t there before — getting offline and getting out in “meatspace.” Saying hello to a neighbor you don’t know yet… engaging at a farmer’s market or community festival… finding a group of folks who enjoy the same pastimes you do.

Or… heading to a house of worship, if the spirit so moves you.

This Is Not a Bullish Sign

This can’t be bullish for the stock market: Venture capitalists are putting startups on notice to slow their roll with plans to go public.

That’s according to the Financial Times, which says the VC crowd was mightily disappointed by the recent return of chipmaker Arm Holdings to the stock market, as well as the stock-market debut of grocery delivery firm Instacart.

The guidance: Wait until the Federal Reserve is done raising interest rate. “Unless you need to go out, I’d wait until the second half of next year,” advises Mike Volpi, general partner at the VC firm Index Ventures.

With the uncertainty of a “partial government shutdown” out of the picture (for now), the stock market starts a new month stuck in neutral.

The Dow is down a third of a percent; the Nasdaq is up more than half a percent. The S&P 500 splits the difference, ruler-flat at 4,288. Bond yields are moving back up, the 10-year Treasury near 4.67%.

Precious metals got whacked on Friday and the punishment continues today. Gold is down to $1,830, silver to $21.23. Crude is getting pulled back below the $90 level, a barrel of West Texas Intermediate now $89.02

The big economic number today is the ISM manufacturing index, up to 49.0, but that’s now 11 months of sub-50 readings suggesting a contracting factory sector.

Catching up from Friday’s figures, the Federal Reserve’s favorite measure of inflation — “core PCE” — is finally under 4% for the first time in over two years. But that’s still well above the Fed’s 2% inflation target; barring something unexpected, Jim Rickards says count on one more Fed hike from this rate-raising cycle on Nov. 1.

Dividend Downside?

With squirrelly Wi-Fi access on the road, I’m having trouble accessing the feedback@paradigmpressroom.com email account.

Looks as if there’s a lot there, including some reaction to Friday’s edition. Perhaps we’ll do an all-mailbag edition on Friday after the busyness of the Paradigm Press Summit winds down.

Still, I won’t leave you empty-handed…

After Wednesday’s edition extolling the virtues of dividend investing, one of our regular correspondents writes…

“Fifteen-plus years ago I was a big fan of dividend stocks, especially dividend growth equities.

“I didn’t invest in high-yielders because that was the riskier side of the street. I played it safe (or so I thought) by focusing on ‘aristocrats’ and ‘champions’ with long histories of reasonable, steadily growing dividends.

“I did my homework and put my retirement dollars where my mouth is.

“The more those stocks declined in price, the more shares (and future dividends) I bought!

Because it’s a time-tested strategy y’know — and you can’t fake cash payouts! Or something like that.

“You probably see where I’m going with this.

“It turns out that financialization makes anything possible, including ginning up the dollars needed to pay quarterly dividends (until things crack up).

“When the financial crisis hit, I got my ass removed. Share prices tanked. Dividends were slashed or cut altogether. Those stocks never recovered; and neither did I.

“There were probably red flags that I should have seen, but missed.

“So I have paid a tuition to learn this lesson. Perhaps others will find it useful?

“Be careful out there. S*** happens to equity income investments too.”

Dave responds: Thank you for the reality check. You do have to do your homework — or let someone like Zach give you a helping hand.

The point is that with the proper homework, the strategy works splendidly. We’ve cited it before, but the case of Coca-Cola during the global financial crisis is instructive.

Going into the recession in 2007, KO stock was $22.27 and the dividend was 48 cents a share.

Yes, the share price was cut down to $14.54 by the time of the stock market bottom in March of 2009 — a 35% drop.

But KO’s dividend kept rising… from 48 cents a share in late 2007 to 56 cents at that early 2009 bottom.

Better yet, the share price recovered to its late 2007 levels by autumn 2010… by which time the dividend was up to 66 cents. So while the share price basically went nowhere for three years, the payout on shares bought at the beginning of that three-year span had grown 38%. (How many jobs deliver 38% in pay increases over three years?) And of course, both the share price and the dividend have grown steadily since.

We understand where you’re coming from. But don’t throw out the baby with the bath water!

Best regards,

 

 

 

 

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets