What’s this? We first read the name Lang Hancock yesterday while researching the history of the Pilbara iron ore deposits. We opened up the Financial Review yesterday and read that Hancock’s heirs are still fighting over a huge iron ore fortune. They are not, however, fighting amongst themselves.
From what we can gather, Hancock’s children are fighting with the children of Hancock’s boyhood friend and long-time business partner Peter Wright. The squabbling children are fighting over AU$4 billion worth of iron ore at the Rhodes Ridge iron ore tenement in the Pilbara.
Sigh. AU$4 billion is a lot of money. It might even be worth fighting over. But does it make you a little sad when children fight over the fortunes their parents have made? There must be some unofficial law of evolution that says family fortunes never last more than three generations.
A man makes his fortune. His son inherits it. But there’s so much of it that not even a prodigal son can waste it all in one lifetime. By the time the third generation comes along, the family has a tradition of wealth. It thinks of itself as rich. But in reality, most of the capital has been frittered away in vanities and bad real estate deals. The third generation spends its time and energy trying to recover the past glory, of squabbling over the scraps and the trappings and trinkets of an antique fortune. That’s how it was in our family, anyway.
By the way, we think you could apply this narrative to America as a whole and it would pretty much describe what’s happening from a generational point of view. It’s also a symbol of a certain loss of national vigour and imagination. The nation’s wealth and capital stock were greatly increased after World War Two. The Boomers, born into affluence, took high standards of living as their American birthright. Then, they systematically spent, squandered, or diminished everything they had inherited.
It started with the Vietnam War, advanced to the Great Society, evolved into the War on Drugs, and lately has incarnated as the War on Terror. All of these projects were born out of the belief that without enough money and idealism, you can change anything. All these great social and political projects have depleted America’s treasury.
Content with its impression of itself as rich and powerful, America stopped saving, too. This lack of saving has led to less real capital formation. Globalisation has ensured that many capital-intensive industries – the ones that create jobs and income – have migrated to China. The Boomers are left with inflated expectations and a nauseous kind of nostalgia for an un-recoverable past, where the Rolling Stones play “Satisfaction” in and endless loop and the climate never changes.
Incidentally, it’s this nostalgia that we think foreigners find so off-putting about America. When Americans talk about greatness, they are always referring to something their parents or grandparents did, not something they plan on doing themselves. They are too busy paying homage to an image of America to actually go out and build an America their own kids could be proud of. It’s a knee-jerk kind of pride that refers to someone else’s accomplishments, not unlike a sports fan who claims a team’s victory as his own.
We hope Australians don’t fall into this dangerous pattern of confusing national greatness with government authority and military power. A nation is never really great. Only its people are. Politicians try to hijack the aspirations of a people for their own ends. This is why all politicians are to be treated with suspicion and scorn. And yes, even though we like Ron Paul, we think he’s in the wrong business. No great political saviour is going to make you freer, richer, or smarter.
Markets and Money