To conclude our series on lessons from history, let’s look at a false assumption: that war can somehow lead to prosperity. Some economists claim that war is somehow profitable—but the fact is that war has never led to prosperity in any form in history. Let’s examine the truth of the matter.
Investing in Peace
While many countries, including the U.S., have invested heavily in the military, there has been a continuous and substantial investment in peace throughout the world, although it may not be called that. This contradicts the idea that war is profitable.
Around the world, almost every major city has built a fantastic international airport in the last 50 years. This isn’t necessarily true of the U.S., but airports throughout Europe, the Middle East, and Asia are incredibly beautiful and traveler-friendly. The money for these major airport investments didn’t come from surplus, but from a real investment in the future. Someday, someone will have to pay back this investment (future generations), and if tourism and adequate surrounding industry do not produce the tax revenue, more problems will be created, as we have already seen with the war in Ukraine.
A typical airport is not just a place where planes take off and land—it is more like the center of a small city in its own right. There are shops, boutiques and excellent restaurants inside and outside the airport. First-class hotels are conveniently located nearby.
Tourism
Why do cities and countries invest in airports? Because people travel. This industry started almost 50 years ago and has boomed like no other with huge investments around the world. We can’t imagine what would happen if this industry were stopped by a crazy 3rd World War—COVID already showed us what it might look like on a smaller scale. And no one ever said, “Only people from a particular region of the world should travel. We don’t want anybody from the other regions.” No, travelers from all over the world are welcome at such an airport.
There has also been a lot of investment in the broader tourism sector, such as 4 and 5-star hotels and resorts around the world. As an Austrian living in the U.S., I have personal knowledge of the kinds of investments countries are making in travel. There is a ski resort in Austria called Ischgl that was built largely for Russians. The resort caters to Russians who travel to Austria to ski.
Significant investments have been made in other major tourist attractions. Cities around the world have fine museums so that visitors can enjoy the culture and art of a city. This summer, many people will visit Europe to see the Colosseum, the Vatican, the Sistine Chapel, and many other sites so they can get a feel for Rome and Florence. Not only are there museums and restaurants, there are the Red Buses in these cities so a visitor can hop on and take a tour.
There is also a huge industry built around cruise lines. 30 years ago we would never have imagined these huge ships, like floating cities, that dwarf even the Titanic. There are even cruises to Antarctica.
People today have realized that the world is very small, and they want to see what is in Thailand, or Japan, or Africa, or Europe. And all these industries need consumers and tourists.
Impact of Wars
We’ve now seen the extraordinary investments that have been made in peace and in sharing our planet. What happens in a time of war, such as the current one in Ukraine?
First, trade between warring countries, on which countless businesses depend, comes to a complete halt. At the same time, travel and tourism cease. How, then, can it be said that war brings prosperity? Real prosperity comes only in times of peace.
If you are an investor, the timing of your investment is an important factor. For example, let’s say you want to expand a business to another country. You need to build a new location with multiple shops, like the Bacio di Latte ice cream shop is currently doing. Although it has Italian roots, the company is based in Brazil and has 2,500 shops. They are now expanding into the U.S. with their fabulous ice cream and can currently be found in several locations in the greater Los Angeles area.
Bacio di Latte has obviously done its homework and is investing in a relatively risk-free country. But if you were an investor looking to invest in another country, you would certainly not do so if that country was at risk of internal or external conflict. No one will invest in a country at war, or even in a country adjacent to a war-torn region.
So, war ruins our business strategy. On a global level, the business strategy of tourism that has been implemented over the last 50 years, with airports and surrounding businesses and infrastructure, is also being ruined. Why would we want to limit what is so profitable?
Three Pillars
Prosperity depends on a stable environment, and such an environment has three main pillars.
- Security
Travelers and tourists will not patronize airlines, railroads or cruise lines that have the slightest lapse in security. If a passenger doesn’t know whether a plane will be shot down or a ship torpedoed, they won’t use that mode of travel.
Security includes not only the security of the aircraft, but also the security of the airport, port or railway station. Thus, “security” is a holistic concept.
- Experience
The second factor that a traveler or tourist expects is experience. They want to buy, they want to consume. Therefore, a destination must offer attractive goods, services and experiences. These, of course, require sales.
- Ease of Access
When someone wants to get to a destination, they want easy access. This includes the means of travel. Events such as we saw recently in the U.S., with thousands of canceled flights and stranded travelers, are obviously barriers to global prosperity.
If access becomes too difficult, people will simply walk away. A consumer will stop consuming and not buy in the future. Businesses and commerce as a whole then lose a buyer. Therefore, access needs to be easy, not more complex, as it can be when it comes to air travel.
Removing Barriers
Interestingly, when the government is not involved in the conduct of normal business, it is easy. There are far fewer barriers to trade and consumption.
When free enterprise exists, competition among businesses provides greater value to customers. Competition without monopolies means that products and services are constantly improved. When products and services are more or less equal, the better provider wins.
Consumers don’t appreciate barriers to purchase. I recently saw pictures of grocery stores in San Francisco that shoppers can no longer easily enter because of the intense security created by an overwhelming homeless situation and the constant threat of shoplifting. This situation has been created by a weak, unsustainable infrastructure.
Killing our Investments?
Billions of dollars have been invested in tourism infrastructures. They were built to last 50 years or more and pay back their investors. What if they don’t survive?
War has never produced anything except death and wounded veterans with physical and mental scars. Just listen to the survivors of the conflicts in the Middle East and Vietnam—they will tell you all about the realities of war.
We are currently in the midst of another war, with unprecedented events such as the entire Western world coming together with the mantra, “Russia cannot win, and we must feed every last Ukrainian into the war if it means removing Putin.” If this war continues and expands, all our investments of the last 50 years could disappear.
People are fed up. We see this in the riots in France and elsewhere in the world. People feel they are losing and don’t seem to care anymore, and they then go out and riot and steal (don’t get me wrong, I’m not in favor of any violence—protesting should be done in peace and with dignity).
The End of an Age?
In his excellent book The Road to Ruin, author James Rickards discusses the collapse of the Bronze Age around 1200 B.C. This event came with incredible speed, and within 50 years almost every major kingdom had crumbled. The Egyptians, Mesopotamians, Mycenaeans, Hittites, and others fell into chaos. Cities burned, trade vanished, invaders came, and wealth was lost. City dwellers fled to the countryside and became farmers. Thus began a 300-year Dark Age that lasted until the rise of Athens and Rome.
Rickards points out that the collapse of the Bronze Age was very similar to the better-known collapse of the Roman Empire a few thousand years later. The lesson, he says, is that civilization is not linear but cyclical. Society does not become endlessly rich and sophisticated and then collapse. It is not the end of the world, but the end of an age.
If we continue as we are, our present age could end and we could plunge into darkness. No one knows how long it would take us to resume, if we ever would. That’s not going to happen right now—tourism is still thriving in many parts of the world. But it could all end in an instant if some mad leader with access to the red nuclear button decides to act on his or her psychosis.
Turning it Around
We can continue on the path we’re on and ruin everything. Or we can take it to the next beautiful level with the incredible technology, including A.I. and the Internet, available to us today.
We have democratizing technology at our fingertips that has allowed us to create alternative channels to mainstream media, such as Telegram, that provide a complete picture of today’s leaders making unwise decisions. In the past, ordinary people did not have access to real information. But today, technology allows us, with iPhone and Android devices, to photograph events as they happen and post them on social media. Lies can be completely bypassed. With the truth, we can move forward and be set free.
I believe we still have the power to change all of this. Part of what inspired this belief was marching with our dog in the Pacific Palisades 4th of July parade. There were happy people all around, sitting, caring, eating and drinking, peacefully sharing, enjoying life and celebrating.
Thomas Druyen, the founder of the IZZ-Institut at the Sigmund Freud University in Vienna, recently published this statement: “According to human judgment, the coming decades will be marked by further conflicts, which may well include nuclear or world wars. At the same time, the whole of humanity is waiting for an age of harmony. The dream of a world without warlike conflicts has existed since time immemorial. … We eagerly await a new, universal system that will agree on moral values valid for all.”
There is a beautiful quote in the Old Testament of the Bible where the prophet Isaiah predicts that in the future, people will beat their swords and spears into plows and agricultural tools, and nations will no longer make war (Isaiah 2:4). I believe that every generation has this prophecy to fulfill in their lifetime.
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