Every new generation looks at how socialism failed in the past and says, "But we can do better." When you point to the failures, people say, "Yeah, but that was Cuba. That was Venezuela, Argentina." Okay. But can you find harder-working people than Germans? The best example of the failure of socialism is East and West Germany. You literally took a country, drew an arbitrary line, and suddenly East Germany was incredibly poor and West Germany was incredibly wealthy. Same people. Same language. Same culture. The only difference was the system. You could fly over Germany at night and see darkness on one side and bright lights on the other. This is an excerpt from my interview with Paul Ollinger (@Paul_Ollinger) on his Reasonably Happy podcast. Full conversation: piped.video/mNzWLj02Fog

We own a French company that makes fighter jets. Demand right now is off the charts. They could probably have 10 to 15 years of orders. We asked them why they wouldn't boost production. Did they not have the factory space? They said they have plenty of space. But the second they hire more people, they can't lay them off. Because of that, they're not hiring more. When every hire is a lifetime commitment, companies stay small, and new companies don't get started. Look at the number of startups in Western Europe compared to the United States. The protection of workers did not protect workers in the end, because you stop creating new jobs.

$AAPL. I love the products. I am typing this on one. The stock is a different conversation. * 2009 to 2019: earnings per share grew 25% a year. You could buy the stock for about 16x earnings. * 2019 to today: earnings per share grew 17% a year. The stock trades at 39x. * Growth slowed by a third. Price per dollar of earnings more than doubled. * And that 17% flatters the business. About 4 points of it came from buybacks shrinking the share count. Strip that out and the business itself grew 13% a year. * Buybacks are wonderful when the stock is cheap. At 16x, a year of Apple's profits could retire about 6% of the company. At 39x, the same profits retire about 2.5%. The higher the stock goes, the less the buyback does. * Where did the growth come from? Apple sold 231 million iPhones in 2015 and about 247 million last year, per IDC. That is 7% more phones in ten years. iPhone revenue is up 35% because the average phone costs about $175 more. Raising prices is a fine business. It is not a growth business. * So: slower growth, mostly from pricing, a buyback that does less every year, and a stock priced at more than twice what investors paid for a decade. * I have seen this movie. Walmart in 2000. Nike in 2021. Nothing wrong with the company. The stock got ahead of the business. Either the business grows into the price, or the price comes down to the business.

When I lived in the Soviet Union, I was always told we were building toward communism. When I was 10 or 12, I asked my father when we were going to get there. He said we get to communism when we evolve into better human beings. When we live in a classless society. When we care about everyone else as much as we care about ourselves. I only understood that answer today. I don't think he believed it. I think he had to say it so I wouldn't get in trouble, or so he wouldn't. Communism requires us to elevate into human beings who don't exist. That utopia does not exist.

Whenever the government tries to meddle in the economy, it creates second-order effects. When the Federal Reserve took rates down to zero through quantitative easing, we created a housing bubble. When money is almost free, people borrow more and pay more for houses. Prices stop reflecting what people earn. Today the housing market is dead. Housing prices went up so much that the younger generation is priced out. If you want to start a family and buy a house, you're out of luck. That is the government playing God in the economy.

No eggs. No chicken. Two pounds of meat a month, per person, that was the Soviet Union he grew up in. @vitaliyk, CEO of IMA Investments, grew up under a government that owned every business in the country, down to the pizzeria. "Every single business unit in the country was owned by the government, from pizzeria to barbershop to oil refinery to shipping port, every single one." "Every family gets two pounds of meat per month per person." Watch the full podcast - piped.video/mNzWLj02Fog

It's human nature to wake up in the morning and worry a lot more about your kids, your wife, your family than about somebody 10 miles away. Selfishness is not popular. In the Soviet Union, if you said you were selfish, they would make you feel horrible about it. But that's how we function. Elon Musk didn't build SpaceX and Tesla to better society. That's the second- or third-order effect. He built them because of his own drive. Adam Smith said it's not out of benevolence that the baker makes his goods. It's out of self-interest. The beauty of capitalism is that everybody wakes up in the morning, makes very selfish decisions, and in making those decisions, they benefit the whole.

When I saw the first pizzeria open that was not owned by the government, it broke my head. I did not know such a thing could exist. Until I was 17, every single business in the country was owned by the government. From the pizzeria to the barber shop to the oil refinery to the shipping port. Every single one. The idea that a person could actually own a pizzeria had never entered my mind. You would go to the store and the shelves were bare. No eggs, no chicken. They gave you coupons. Every family got two pounds of meat per month, per person. We were never hungry, but my mother lived with constant anxiety about how she would feed us tomorrow. And we had it good. My father was a professor, he was well connected, and we had one of the biggest apartments in the city. We lived better than 80% of Russians. Then we came to the United States, where we were at the bottom strata of Americans. And our poor American life was still better than our rich Russian life. There is a great saying. In theory there is no difference between theory and practice. In practice there is. Paul Ollinger (@Paul_Ollinger) and I talked about why socialism is surging in America again. Full conversation: piped.video/mNzWLj02Fog

Same people, same language, one arbitrary line, and one side starved while the other got rich. @vitaliyk points to East and West Germany as socialism's cleanest, hardest-to-argue-with failure. "It literally took a country, drew an arbitrary line east and west, and suddenly you can see how Eastern Germany was incredibly poor and Western Germany was incredibly wealthy." "Can you find harder-working people than Germans?" piped.video/mNzWLj02Fog

$COST is a great company. Earnings up 7x in 20 years. Stock up 18x. The difference is the multiple: 20x in 2006, 30x in 2016, 49x today. At 49x you are buying the assumption that nothing ever goes wrong at Costco and that the future will be better than the past.

As you get older, you realize that you don't need to make either/or decisions and can completely ignore the question asked. The answer here is both.

The government isn't going broke — it's just going to print its way out. @vitaliyk, CEO of IMA Investments, breaks down why $40 trillion in debt makes inflation the default nobody calls a default. "Inflation is basically broken promises by politicians. Our government will never default in the traditional sense — it's going to default through inflation." "Nothing is going to change in this country until we have a heart attack." piped.video/mNzWLj02Fog

Punish success and you kill off the next founder before they start. @vitaliyk, CEO of IMA Investments, gave up ten times the salary and put in ten years of 70-to-80-hour weeks before his firm ever worked. "It took me ten years of insane work, working 70 to 80 hour weeks, to make my company a success." "The future version of me, or my son, or other people who see this — why would I put all this work and all this sacrifice in for this?" piped.video/mNzWLj02Fog

$NKE is a great example of a good company that became a stock priced for the sun to shine 365 days a year. Revenue tripled. The stock went up 10x, then fell 68%. The sun shone for a while. Until it didn't.