Hormageddon

by Bill Bonner

“Hormegeddon” is the term coined by entrepreneur and New York Times Bestselling Author Bill Bonner to describe what happens when you get too much of a good thing in the sphere of public policy, economics and business. Simply put, it ends in disaster.

Drawing on stories and examples from throughout modern political history—from Napoleon's invasion of Russia to the impending collapse of the American healthcare system, from the outbreak of WWII and the fall of the Third Reich to the 21st century War on Terror, from the Great Recession to the sovereign debt crisis—Bonner pursues a modest ambition: to understand what goes wrong.

History is not a clean yarn spun by its victors. It is a long tale of things that went FUBAR—debacles, disasters, and catastrophes. That each disaster carries with it a warning is what makes it useful to study. For instance, if the architect of a great ship tells you that ‘not even God himself could sink this ship,' you should take the next boat. If the stock market is selling at 20 times earnings and all the expert analysts urge you to ‘get in’ because you ‘can’t lose’—it’s time to get out!

Similarly, public policy disasters are what you get when well meaning people with this same Titanic degree of certitude apply rational, small-scale problem-solving logic to inappropriately large scale planning. First, you get a declining rate of return on your investment (of time or resources) until you hit zero. Then, if you keep going through the zero floor—and you always keep going—you get a disaster.

The problem is, these disasters cannot be stopped by well-informed smart people with good intentions, because they are the people who cause them in the first place.

From the mind of Bill Bonner comes Hormegeddon, a phenomenon that occurs when a small dose of something produces a favorable result, but if you increase the dosage, the results end in disaster. The same applies when the world gets too much of a good thing in public policy, economics, and business. Drawing on examples throughout modern political history, Bonner brings context and understanding to this largely ignored and anonymous phenomenon.

Genres: Nonfiction, Politics, History, Economics

Unknown Binding

First published July 21, 2014

Reviews

[Ridgewalker · Rating 3 out of 5]

Three stars does not mean this book was in any way bad, more that the authors 'casual' writing style did not appeal to me. I found the premise most interesting and compelling though. A little of a good thing is fine, too much though can lead to disaster. The author goes through numerous examples. One I thought particularly clear on healthcare. Having a doctor to see is a very good thing. Seeing a team of specialists, spending time in the ER and hospital and enduring a battery of tests and treatments starts to not only become questionable in terms of the additional value received, but very very expensive. Mr. Bonner notes that such systems spawn "zombies" who add no value, exist only to reap benefits, monetary or otherwise, they did not earn, and utilize an ever increasing complexity of government rules and regulations to protect what they have. There is no negative feedback loop to stop such excesses and the system continues until it explodes, or implodes.

I enjoyed this book because it was a nice contrast to my somewhat left of center point of view. The conclusion this book draws to is that it is not at all a question of if this global economy is going to crash in an epic fashion, but when.

[Sean Goh · Rating 4 out of 5]

A forcefully written, very dense book. Will probably need a second pass to digest some of the concepts put forth.

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A single storyline makes its teller more in demand at dinner parties, but it also turns him into a fool, because most of what really happened has been shaken out of his history book and left lying on the ground.
"We never know what we are talking about." - Karl Popper

Large scale planners fail because they believe 3 things that aren't true. First, they think they know the exact and entire present state of the community they are planning for (wants, desires, hopes, capabilities, resources); second, that they know where the community ought to go (what future would be best); third, that they are capable of creating the future they want.

Like infectious diseases, public information is made possible by modern, large scale life. Millions of people can now have a conversation about something none of them really knows anything about. It can be fun. But it can lead to serious itching, or 'public thinking'.
A million nuances, an infinite number of real 'facts' based on experience and direct observation, a whole universe of assumptions, misapprehensions, muddled thinking , all reduced to a single phrase (I guess we'll have to go in and clean [Iraq] up). That is public thinking.

Economics
On the foundation of fraudulent numbers and empty statistics, economists build a whole elaborate tower of hollow, meaningless facts and indicators: the unemployment rate, consumer price inflation, the GDP. None are 'hard' numbers, yet the economist uses them as a rogue policeman uses his billy club, to beat up on honest citizens.
Unlike a real, hard science, you can never disprove economic hypotheses. There's simply too many variables, including the most varied variable of all - man.
The problem with this variability is that you can't do much central planning when all key components are unique. You'll have to strip them of their peculiarities, reducing them to a simpler figure that can be worked with.

We understand the world by analogy, not by digits. Even if numbers appear precise, scientific and accurate.

The old economists thought it was absurd to try to calculate an unemployment rate. As long as buyers and sellers were free to make a deal, there would never be an 'unemployment' problem. There would merely be people, who, given the current bid, decided to withhold their labour from the market.

Government

Written "contracts" and constitutions are decorative details of government; force is the essence of it. Without armies and police, governments would no longer be governments.
At the end of the 19th century people were asked what they thought the new century would bring. Almost universally they predicted smaller governments, because there would be less need for it with richer and better educated people.
It didn't turn out that way, because thinkers misunderstood what government really is. It is not an organisation that contractually provides benefits and services, and therefore shrinks as the need subsides. As a society grows richer it can afford more illusions, more entertainments, more re-distribution of wealth, more regulation, higher taxes, and more unproductive people. The insiders take more, because there is more to take and because outsiders can afford exploitation.

Government is essentially and incontestably reactionary. Its aim is to protect existing power arrangements and existing capital. Government's mission is to look into the future.. and prevent it from happening.

Corrections
The story of human life is a story of conflict and challenge. It is the story of evolution, constantly flushing out the weak, constantly making the strong stronger through adversity. We face problems and conflicts; we find ways to rise above them. Or we sink.
Starting out in life, the worst kind of luck you can have is good luck. You learn nothing from success.

Corrections work. They are how we learn. They are how the future happens, by culling errors and backing out of dead-end alleyways. And the longer they are prevented, delayed and dodged, the worse the corrections will be.
________
random
Information, unless it is exactly what you need, has negative value. It's cheap, it's distracting. It must be sorted out, applied and stored. It is wisdom that is dear, not information. Information is like manure. A little, at the right time, is a good thing. Pile up too much and it stinks.

Without substantial growth, the leading economies of the western world will go broke. They need economic growth in order to make good on their financial obligations they incurred by making promises based on 20th century growth rates.

"Most of the world's work is done by people who don't feel very well and would rather not be doing it." - Winston Churchill

Early stage societies tend to be robust and efficient. Later, additional complexity degrades returns on investment. This complexity may be described as a form of problem solving, but is better understood as an attempt by elite groups to hold onto their wealth and power.

Vote for vote, the poor can generally be bought much more cheaply than the rich.

Free healthcare leads to the consumption of more healthcare services. It doesn't really translate to a healthier population.

Politics is the very opposite of persuasion. Markets require persuasion; politics require force. In markets you can't really force people to buy, sell, lend, invest or exchange.

A good debt financed instrument brings forth a revenue stream - a result that justifies and pays for the investment. The marginal utility of debt declines sharply when you begin to use it for everyday spending.

Margaret Mead describes the governing protocol among pre-civilised tribes as follows: A person of your own tribe is a "full human being", someone you will cooperate with. Someone from another tribe is a subhuman, someone you should try to kill.

Mass slavery was a transitional phenomenon. It arose with civilisation and disappeared with mechanisation.
Before civilisation, the hunter/gatherer tribe had no use for an extra mouth to feed, plus it was easy for them to slip away. Only with a surplus of cheap calories could slaves be maintained.

In barbaric communities, violence pays. In civilised societies, it rarely does. Cooperation pays better.

[Don Sevcik · Rating 5 out of 5]

If you've done your homework and read anything about Bonner, you already know what an incredible writer and mind he is. Captain of a 9 figure business, he's the shrewd political and economic mind who's thinking will last for generations to come.

This book shows you how government intervention rarely helps. If you've read AntiFragile by Taleb, you'll love this book. Taleb even helped edit this one.

From economics to politics to civilization, Bonner takes you on an incredible ride showing you how too much of a good thing never ends up being a good thing.

Bonner takes human nature for what it is, which is one of the reasons he's been able to build a massive newsletter and publishing business. He gets deep into human nature (which never changes), and puts up the looking glass for us all to read. He does this with smooth, powerful prose.

Reading this book is like sliding down a greased slide, you can't stop, cannot put it down.

[Lori Hodges · Rating 3 out of 5]

This book has some interesting ideas but the author has an incredibly pessimistic view of civilization with no positive solutions. From beginning to end are examples with no thought on where to go from here. I am not that pessimistic of a person and deeply believe we must try to solve our complex problems instead of just giving up and throwing our hands in the air.

[David VanLopik · Rating 5 out of 5]

Excellent book

Excellent book on the history and development of civilization and government. An eye opener on its evolution. Recommend everyone read for a better understanding of our government.

[Jenny · Rating 3 out of 5]

Fascinating but could have been written a bit better. He repeated himself a lot and then the last chapter was pretty confusing. But the material was really interesting.

[Christopher Goins · Rating 4 out of 5]

Like the ancient Israelites who forsook the very Lord who gave them the principles that made them prosperous, America has forgotten the principles that made it great and free. Gone are principles of hard work; in are the principles of violence and coercion to maintain wealth--and the latter never works, the author argues.

The book starts off with a bang, with some of the best writing in a currents events book that I have ever seen. Bill Bonner's writing skills in this book, but especially the first half, are enviable -- and there are a few people I say that about.

He writes simply.

Content-wise, the book remains interesting: the chapter on the U.S. healthcare system is worth a re-read and its facts are to be memorized as the pledge of allegiance is in public schools (at least when I attended them long ago).

Debt, the following chapter, is well done but would be familiar ground for readers familiar with Ludwig Von Mises' theory of Money and Credit."

The chapter on GDP and Hitler was great, although it was long on facts and could have been shorter.

As someone who is already on the side of government non-intervention in most areas of life, I found this book to contain more intellectual ammunition for the cause of public policy non-interventionists; that is, libertarians (mind that I am a Christian libertarian).

But this book ought to stimulate a change in mind for public policy interventionists, if not completely puncture (probably not) inflated confidence in government or change their mind completely.

For one thing, he doesn't say government is de facto evil or good. He simply asks "is this policy worth it?" He then crunches the numbers for us and shows that most of the time it isn't (see the Healthcare chapter, which ought to be a long form magazine article or something).

As someone who recently went through state-mandated car emissions testing, I can agree with Bonner: it is a huge waste of time. It is the one place you can go to find a bunch of people taking their precious time to spend away from work, family, etc. and to hang with the bureaucrats -- or the ones who work for them. Every day hundreds of people go through these lines and spend time not working on a test that their car will most likely pass.

What is the cost of that?

What are the labor hours not worked as a result of this state-mandated policy?

He also tipped me off to history. For one, I didn't realize it (although I should have) but ancient pyramids were government projects. His argument that slavery was eliminated because it had diminishing returns also was interesting, but that or a similar argument is present in Robert P. Murphy's "The Politically Incorrect Guide to Capitalism," which has been out in stores for years.

There's so much that could be said about this book but I'll leave it at this: I am going to re-read it and internalize many of its arguments.

[Pedro L. Fragoso · Rating 4 out of 5]

Bill Bonner writes with style, that's for sure: " But it was in prices that Zimbabwe really broke records. In 2001, the monthly inflation rate hit 200%. After that, the sky was the limit. In February 2008 the monthly rate was said to be 164,900.3%. Nice touch. Putting on the ‘.3.’ It made it almost look scientific. As if it were something that could be accurately measured, or even controlled. Then, five months later, consumer price inflation in Zimbabwe was clocked at 231.2 million percent. Finally, in September, the IMF saw prices rising faster than the speed of light—at an estimated 489,000,000,000%. By then, the statisticians were only amusing themselves. The numbers meant nothing other than that Zimbabwe had blown itself up." Bill Bonner way with the language is reason enough to read anything he writes.

It does happen that the point he makes, basically that we should very definitely have less government, is important and it is powerfully argued. Of course, we'll have more of I it, not less, and it can't and will not end well.

As powerful as Bonner's argument is, with the exception of the last chapter, which I found lacking, I'm siding with Michael Hudson in this debate. The professor has a better grasp of reality. But he can't write as Bill Bonner: "Anybody who’s ever watched the History Channel knows Adolph Hitler was a xenophobic, genocidal maniac. But another way to look at him, for our purposes, is as a macro-economist with a plan for world improvement that quickly went too far, and became too much."

Or: "John Maynard Keynes revolutionized the economics profession in the early 20th century. It was he more than anyone who created the Simpleton’s Economic Model of today and changed economics from a refuge for keen-eyed observers and willowy philosophers into a hard-charging phalanx of delusional men of action. Keynes’ big insight came right out of the Book of Genesis."

Or: "Constructing a public policy out of public thinking is like building a skyscraper out of marshmallows. h e higher you go, the squishier it gets. Because the information blocks themselves are not solid. Instead, they are combinations of theory, interpretation, guesswork, spin, hunch and prejudice. They are memes, not real information."

Or: "Everyone knows perfectly well that Iran’s government is as legitimate as any other, including the government of the United States of America. All democratic governments owe their legitimacy to the same thing—the decisions of misled voters, based on fraudulent representations by dishonest leaders."

This book is as eminently quotable as it is important.

[Keith · Rating 5 out of 5]

Excellent book. The author, Mr. Bonner, is both amusing and interesting. He does make his point many times over, but the book is a worthwhile look at our economy along with the world's. Now this book isn't about economics so much as it about history and pyschology. The premise is that man tries to make things better and better for everyone, and eventually we have too much of a good thing that causes us to ruin it all. Think of when you were a child and one day got to eat as much ice cream as you wanted. How did you feel afterwards? Not very good, right?

In looking at history, the Roman Empire, the Greeks, the Ottomans, the British, and ourselves - the U.S., we (he says the do-gooders and liberals, but I can handle that) try to govern our way to prosperity by regulations, welfare, income redistribution, etc. All this fiddling with the system ends up in too much. Right now, the U.S. has more debt than anyone could ever pay. Right now we are hanging on by a thread, only because the rest of the world is in even worse shape. This can only end badly - or so Mr. Bonner contends. I agree that it will end badly if we can't change. However, I argue that we are trying to change and have done so. At the end of the Clinton presidency, the budget was balanced. However since then, with wars, bank bailouts, Quantitative Easing, we are slowing sinking ourselves further and further into debt and the end of empire. He claims that once the dollar as the world's reserve currency is taken out by China or Russia or Europe or the Middle East, the chickens will come home to roost for the U.S. Right now the world is holding our debt, so our life style is a cost to the rest of the world while we just sail on.

Mr. Bonner is correct, this can't end well. But the political will isn't there today to actually solve the problems. We are capable of fixing this. Just look at what happened after the huge debts of WWII in this country. Taxes were raised, the budget was balanced, debt was paid off and eventually our economy was the envy of the world. Somehow, we have dodged the bullet for 30 years. We used to be the biggest creditor nation until 1987 or so, and since then we are the biggest debtor of all time. This can't end well. This book is a huge warning to the next generation to all in the U.S.

The book is readable by anyone, but most don't want to know how this disaster lurks over us. Hormegeddon is coming. Hopefully after I am gone.

[Srinath · Rating 4 out of 5]

In his breezy, irreverent, lively style Bill Bonner makes some great points about economics, government, and the futility of large scale central planning. Although targeted mainly at the US, the ideas apply equally well to other nations.

On Economics- Bonner makes the point that we understand the world by analogy, not by digits. Even if numbers appear precise, scientific and accurate. Here is an example he cites- "Imagine that Warren Buffett moves to a city with 50,000 starving penniless beggars. This is what economists would say about that city:"Stop whining...the average person in the city is a millionaire."

On Government- He writes,"The world needs a lot fewer leaders than it has. Most of the time, people go about their business with no need for the expense and distraction of leadership." He quotes the Chinese philosopher Lao-Tzu, "As restrictions and prohibitions are multiplied the people grow poorer and poorer. When they are subjected to overmuch government, the land is thrown into confusion."

Public policy- In a way this entire book is about public policy disasters. Bonner writes, " Generally speaking, public policy disasters are what you get when you apply rational, small-scale problem-solving logic to an inappropriately broad situation." Further, he notes, "the illusions, mistakes and misconceptions of central planners take their toll in a great variety of ways- mostly as costly nuisances." He attributes it to what F.A. Hayek called "the fatal conceit, that man is able to shape the world around him according to his wishes."

http://roots-n-wings.blogspot.com/

[Dan Korth · Rating 5 out of 5]

The history of civilization is a lesson that, when it comes to public policy, "more" inevitably leads to central planning and central planning inevitably leads to eventual disaster. This book is probably the most accessible explanation I've ever found of what ails the United States and really the entirety of western civilization.

Bonner provides a thorough and engaging description of why things are the way they are in the US and why common sense solutions to the nation's problems don't stand a chance of implementation, i.e. common sense solutions threaten the livelihoods of too many people.

This book provides thought-provoking evaluations of the consequences of government meddling in the free market and the declining marginal utility of "more" when it comes to public policy. Bonner provides examples of these consequences evaluating things such as declining health levels despite exploding health care spending; declining wealth among the middle class despite unprecedented access to capital, talent and technology; exploding public debt despite unprecedented tax revenues; a loss of "unalienable" civil liberties; and perpetual war against an enemy that is both unbeatable and mostly of our own making.

An easy and engaging read and highly recommended to any American interested in understanding how we arrived at the mess we're in and where this road inevitably leads.

[Kean Chan · Rating 5 out of 5]

A prescient and courageous book that reveals the ugly and dirty truth about the world.. It helps one to understand why the private sector is always more efficient than the public sector, and the author also managed to explain the essence of what I've always felt about bureaucrats, central bankers, academics, economists and doctors - that they do more harm than good as a whole and why I never have the moral conscience to work in civil service and the healthcare industry

Nassim Nicholas Taleb puts it aptly: "This is a must, must, must read exposition of the side effect of government. It exposes the problem of naive interventionism, the iatrogenics of bureaucracies, and the growing absence of skin-in-the-game (Hammurabi's problem), in addition to other deformities of the modern state, and shows how such a system is bound to explode under the weight of its fragility. It is deep, illustrative, witty, pleasant to read. Buy 2 copies, 1 for yourself, another for the nearest policy-maker"

[Ryan · Rating 5 out of 5]

Can Bill Bonner write a bad book? I don't think so. I've thoroughly enjoyed all of them. His latest, Hormegeddon, makes a complete study of the law of diminishing returns and how too much of any good thing eventually leads to negative returns.

After summing up the thesis of the book, he begins to apply the concept of hormegeddon to various industries, including health care, security, government, and debt. I found the chapter on health care to be especially good.

As always, Bonner manages to remain humble and self-deprecating while building a watertight case for his ideas. Great book. Highly recommended.

[Stan · Rating 5 out of 5]

If everyone is thinking the same way, nobody is thinking. Bill Bonner is definitively thinking. Whether you believe he is brilliant or you're convinced he is an idiot, if you read this book with an open mind, Hormegeddon will stimulate thinking, challenge basic assumptions, and offer alternative views of man and civilization.

[Allen · Rating 5 out of 5]

This book is a really different take on the money problems that this world faces. Bill Bonner is the billionaire that founded Agora. I found it also to be easy to read and right on the money (pun intended)!

[Peter · Rating 5 out of 5]

Best book i've read so far in 2014.

[Dulcie]

Seriously? 298 pages of incandescent juvenile whining followed by 0 pages of positive solutions.
What a jerk, do not waste your time.

[Michael · Rating 1 out of 5]

I'm not sold on either the author's hypothesis nor his writing.

[Abhijeet Pardeshi]

wanna read