O'Leary's Economic Cannibalism: Does Capitalism Need Catastrophe?


A Letter to CBC's 'The Lang & O'Leary Exchange'

The 14 March episode of The Lang & O'Leary Exchange featured a beaming Kevin O'Leary patched in from a beach in the Bahamas who spoke with great enthusiasm about the opportunities the massive earthquake, tsunami, and nuclear meltdowns devastating Japan had created for making a profit. As palm trees swayed in the breeze behind him, O'Leary exclaimed that he was feeling quite “bullish” about investing in infrastructure after so much had been destroyed. This was broadcast by the CBC as the Japanese had not yet finished finding, let alone burying, their thousands of dead and their nuclear reactors were teetering on the brink of full meltdown.

When Lang asked if O'Leary agreed this was a disaster for the Japanese economy, he responded,

Quote:
I actually look at it a different way. First of all, the loss of life is tragic, let's put that in one box. There's no question about it. But I think about the next five years in Japan as an extremely bullish economic incentive in the biggest infrastructure play the governments have been trying to do all around the world to build the economy up. This could be extremely bullish for Japan. And I'm going to be going long on the economy and long on commodities to rebuild. In a remarkable way this could be exactly what the economy needs.
. . . .
Because so many investors, Amanda, are thinking the way I am. I'm looking for Japanese infrastructure plays, I'm looking for port management plays, I'm looking for pipeline plays, rail plays in Japan. I am bullish and so many investors are the same. We're in a time in the economy where there are millions and billions of dollars set aside to invest and here we're finding an opportunity that we think is going to be very interesting over the next five years which is exactly why the market came back. I think Japan is going to be a long-term bull story.
. . . .
Listen, it's been a bad bad week. The loss of life from the earthquake is horrific. Five years from now Amanda, you're going to look back at this and say this was a huge huge buying opportunity.
. . . .
I think everybody's got it wrong on Japan. Let's put the tragic loss of life aside because it's awful that that happened, but this is exactly what the economy needs: massive, massive infrastructure spending for the next five years. It's going to put huge demand on every commodity—oil, natural gas, metals, iron ore, steel, you name it, it's going to be needed in Japan. This is probably a turning point for Japan's economy that you've never had, that you've needed in the last twenty years (Lang: “Ya”). It's a huge win if you're an investor.

This perspective should not be discounted for the sake of sentimental feelings about the thousands of lives lost or the potential for nuclear disaster. After all, it is apparently necessary that we put those human feelings in a separate “box” if we are to understand how investors think. The key insight that Lang and O'Leary reveal to viewers is that investors seek relative profit in a limited marketplace, not simply general productivity and absolute gains. Lang draws out this distinction when she points out to O'Leary that,

Quote:
...the problem is: stimulus spending on infrastructure is usually good because you're improving something, you're improving a road, you're building something that didn't exist before, in this case, Japan might spend hundreds of billions just to get back to where they were last year. It's not like anything is going to be that much better, it was already advanced stuff, they're just replacing lost material, so it's sort of a false stimulus to say that they're actually adding to their economy—they're not. They've eroded a bunch of wealth.

To which O'Leary ardently rebutted,

Quote:
What do you call World War II? What is World War II? Was that not a false economy? It created the largest industrial boom in the history of North America. It's the same thing: when you focus your energies on one rebuild, this is exactly what's going on here, this is a form of war, it was a war with nature. It wiped out a huge portion of that economy; now they have to rebuild. Buying opportunity extraordinaire!

Lang then said “I hope for the Japanese people you're right.” and made light of O'Leary doing the interview from a beach in the Bahamas, to which he then gloated, “It's hard work but somebody's got to do it.”

To say that O'Leary's comments were merely in poor taste would be an appalling understatement and would miss the most important insight they offer the majority of us. This well publicized investor uses publicly funded government television to obnoxiously spew his sociopathic greed. But his assertion of what capitalist interests are in modern times is exactly right. The irony is that in trying to popularize an unapologetic, 'in-your-face', self-described “capitalist pig,” government media has revealed the irrational limitations of capitalism in our time. Decaying capitalism needs destruction because it does not serve our collective needs but the greed of a tiny few who hold all the chips and profess amorality to excuse the inexcusable. It is a keystone in the irrationality of the economy that is forced on us wage workers and we should reject it.

-Brandon Gray

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Submitted by Brandon on Sat, 03/19/2011 - 20:10.
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