While we’ve gone about our daily lives, billions of hidden agents have established an empire across Europe.
Over the last 80 years, they have set up millions of outposts from northern Italy through southern France and all the way to the Atlantic coast of Spain.
They have brutally usurped and butchered their native European rivals in a zero-sum game for territory and resources.
The expertise and authority required to carve out, coordinate, and control an empire that could cover the distance from San Diego beyond the northeast tip of Maine makes this exploit seem impossible.
It should take a legendary figure like Alexander the Great or a conspiracy of powerful people to accomplish such a feat.
But there is no such emperor or conspiracy. In fact, no one is in charge at all.
Deceptively Simple Rules
The empire that has come to dominate such a wide swath of land is a supercolony of Argentine ants.
It is made up of millions of independent colonies that have brutally destroyed their rivals. Yet you can take Argentine ants from Portugal and drop them in an Italian colony, and they all get along just fine.
These ants will not hesitate to slaughter their kin in South America, so what changed when they crossed the Atlantic?
Entomologist Kenneth Ross of the University of Georgia called it a “resource bonanza.” A small group of invasive, nearly mindless ants found themselves in a situation where they could dominate and thrive.
It doesn’t take a central figure or vast and powerful conspiracy to create the illusion of centralized coordination. It just requires swarm intelligence.
Picture a school of fish, a flock of birds, or a swarm of bees. Their movement is eerily synchronized and appears to be part of a fluid, overly complex system.
Humanity was hopelessly terrible at figuring out how creatures with such low intelligence could pull it off until computer science and biology collided in the late ’80s. Cold, hard math teased out the three rules of swarms with ease.
All it takes is a reward for coordination and three simple rules:
- Separation — avoid crowding neighbors (short range repulsion)
- Cohesion — steer towards average position of neighbors (long range attraction)
- Alignment — steer towards average heading of neighbors
Just like a person watching a swarm, people are mesmerized by the complexity and synchronization of the global wealthy elite. Grasping for an explanation, many attribute it to vast, malignant conspiracies.
The fact is, there is no need for secret meetings in smoke-filled rooms to create a global elite of obscenely wealthy CEOs, banking executives, and industry magnates.
The super rich are following the same three basic rules unintelligent creatures have for eons. As they aim for the “resource bonanza” they can extract from the rest of us, their behavior converges and appears coordinated.
Here is how the three rules work for them…
Staking Claims
There is plenty of money to be made, and avoiding a turf war with another company or big-time investor is crucial. Separation is essential to avoiding wasted wealth and time when there is plenty of low-hanging fruit.
The wireless spectrum auctions conducted by the Federal Communications Commission are a prime example. Although cell phone carriers are highly competitive, bidders can unwittingly coordinate without it being a conspiracy.
When competition is weak or a single bidder has an intrinsic advantage to win a license, other bidders will back off and not bid at all. One bidder gets the resource at a low cost, while the others save resources for the licenses to other areas all at the cost of the FCC, which collects licensing fees on behalf of the American people.
Wealthy individuals do the same. They normally won’t take large short or long positions against each other and will not get into bidding wars over shares of a company. It is far easier to stake your own claim.
The only time you’ll really notice this is when it goes wrong, such as Bill Ackman and Carl Icahn’s public spat over Herbalife.
If it weren’t for their pride, both men could have been unopposed in shaping market sentiment about other companies and extracting more profits from different boards of directors.
Sticking Together
Cohesion is necessary to keep the swarm intact and protect everyone from outside forces.
Competitors jointly contribute to industry trade groups and lobbying efforts. Policy concessions from company pressure, industry-written laws, and disingenuous publicity campaigns are the norm.
The recent Citizens United Supreme Court ruling added a new element. The super rich can anonymously donate whatever they want from their personal wealth to ensure the health of their entire class.
On a social level, news of a reporter sneaking into a private meeting of Kappa Beta Phi, a Wall Street fraternity, just broke.
Executives from too-big-to-fail banks, massive private equity firms, and touted hedge funds laughed in unison to skits mocking the poor and a parody of ABBA’s “Dancing Queen” called “Bailout King,” all while gorging on racks of lamb and foie gras.
No sympathy was given to the fact that their members brought the world to its knees and extorted trillions out of the common people to maintain their lavish lifestyle. No hint of remorse could be found over the charred remains of the retirement savings of millions of Americans.
The swarm was self-reinforcing and sticking together. Since everyone else isn’t a part of it, they don’t matter.
Follow the Trend
Alignment, in this context, is all about sticking to the trend.
Wall Street has driven markets to all-time highs on multiples, not on immediate information. Their army of analysts has been deployed to keep retail investors in line.
Brokers have pulled countless millions in fees as people chased the trend they created.
Equities drop in unison when what used to be considered positive economic information comes out. To stay aligned, members of the swarm avoid the temptation to capitalize on hints of recovery in favor of staying in formation at the free-money feeding trough.
Commodities get battered as investors pull out and short positions increase after news stories quote bearish analysts singing like a choir about the end of the super cycle.
Staying aligned with the market sentiment has even reached the point where course corrections occur in milliseconds. Traders are willing to pay tens of thousands of dollars to get market news two-thousandths of a second before the general public.
In essence, they are competing to be the first to follow the trend that the swarm will follow. There is no longer any ambiguity in how others will react nor any incentive to compete with a “contrarian” position.
A Far Worse Reality
Don’t get me wrong: there are conspiracies in finance — but not nearly as many as some would make it seem. LIBOR is a great example, but that is virtually a drop in the bucket from lowly trading desk jockeys when compared to the grand picture.
There is also plenty of plutocracy going on, but it is not dictated in the back rooms at a Bilderberg meeting. Reality is far simpler… and far worse.
There are no grand, all-encompassing conspiracies because it is all done right out in the open. We’ve reached a point where there is no need for subterfuge.
We live in a day and age where governments are entirely dependent on the super rich. Politicians need them to bankroll elections and then act as advisors in policy meetings because they’ll ship middle-class jobs overseas if the terms aren’t favorable.
They need the approval of institutional investors, otherwise the market (which Americans have been deceived into believing is also the economy) will drop, and they’ll be blamed.
Market conditions are tweaked by central bankers in order to cover up the excesses of bankers who can do no wrong in the eyes of the law. The same select elite that nearly tanked the entire world enjoys safety from prosecution.
It is just a rigged system with no one at the wheel. It is the collective result of decades of individual actors. There is only a swarm hogging all of the resources, gorging until there is nothing left.
It truly does appear to be an overly complex system that is being exploited by a conspiracy of the global elite. It just seems more sinister and coordinated because we’re on the outside.
We’re left to fend for ourselves, and we have never played by the same rules. All we can do is desperately try to protect our dwindling share of the “resource bonanza” from them.
The rules will never change. However, I have no doubt that the super rich would rip each other apart under different circumstances.
The only thing we can do is limit access to the “resource bonanza.” The rest will take care of itself.
