If the World were Ruled by a Cabal
Cabals don't target inflation
It’s conspiracy season again. This time, the President is accusing a previous President of a coup, all in an attempt to distract away from another conspiracy theory that he helped peddle in the pre-election period.
But these conspiracy theories are plain tame compared to what we see out there sometimes. No, I’m not here to talk about conspiracy theories about planned obsolescence or Macron’s wife being a man.
Rather, I want to face off against the final boss of conspiracy theories: that there is a secret group or cabal out there ruling the world and pulling the strings. They cause wars, they design our TV programmes, and they try to stop us from drinking raw milk.
These conspiracy theories have dozens of variations. Some are related to lizard people, while others focus on everyone being a secret Jew. But they all circle back to a group that has achieved world domination.
I’m here to humor the conspiracists. Let’s discuss what the world would like if they were right.
Macroeconomics of World Domination
If the world were ruled by a cabal, there would be no war. Ever. After all, war is wasteful. Homes are destroyed, resources are lost, people are killed. The secret cabal would much rather enslave those people or steal those homes. Why have war? Some will argue that it’s to help enrich the owners of Lockheed Martin or other military manufacturers, but this misses the point. If you control the world, you can just give those firms money in peacetime. Why bother losing resources through war? It’s a waste.
If the world were ruled by a cabal, we would have free trade everywhere. Free trade helps production! Sure, sometimes some people might be worse off from trade, but the secret cabal doesn’t care about that. They just want to have as much production of resources so that they can get as rich as possible. Therefore, a secret cabal would abolish all tariffs, quotas, and other forms of protectionism.
If the world were ruled by a cabal, there would be no unions. After all, they make suppress production.
If the world were ruled by a cabal, there would be no fertility crisis. Labor is necessary for production, so why allow people to have less babies?
If the world were ruled by a cabal, there would be a lot fewer humanities majors. They don’t really help grow GDP.
If the world were ruled by a cabal, there would be no NIMBYs. NIMBYs make building more difficult, the cabal would never allow them.
If the world were ruled by a cabal, there would be no capital gains taxes. Capital gains taxes disincentivize investment and economic growth.
If the world were run by a cabal, there would be no immigration restrictions. With free migration, labor moves from less productive to more productive locations. This would maximize growth.
If the world were run by a cabal, we would tax carbon. After all, the cabal would want to minimize the odds of a climate catastrophe.
If the world were run by a cabal, we’d have more nuclear energy, more solar energy, and in general a lot more cheap renewable electricity.
If the world were run by a cabal, AI would be tightly regulated. The cabal is not going to risk AGI taking over.
If the world were run by a cabal, the tax rate would be set very carefully to maximize expected revenues for the cabal over time.
If the world were run by a cabal, we would have nominal GDP targeting.
Conclusion
Really, the point here is that a cabal would run the world like efficient authoritarians run their countries. The world would look more like the inside of China and less like…this.
Or to put it bluntly, we do not have nominal GDP targeting, therefore the world is not ruled by a cabal.