In this chapter, Jarislowsky lays out his belief that successful investing requires a realistic appraisal of the economic and political world that we live in. He believes in moderation and individual rights and he takes a long term view in almost all of his activities.
He bluntly lays out many of his social and political views by stating pros and (a lot) of cons in the different major regions in the world. He likes the productivity in the US but feels that Canada is lagging the US because we don't strive for excellence enough. Europe is seen to have problems with high unemployment and high taxes. Japan is loaded in government debt and the cultural norms there are hurting ingenuity because they don't stress individualism enough. In his opinion, Asia needs to get away from selfish politics and improve their ethical standards.
Jarislowsky takes Bush to task with his war on terrorism stating that this is destoying what America stands for. He feels that Amercia's war on terror is giving rise to increased terrorism in Afghanistan and Iraq. In his view, the war on terrorism has "hijacked" the focus away from economic realities in America.
He explains that if the US dollar contines to fall, then non US holders of US cash and bonds will continue to want to sell these assets. He feels that the US would need to respond to liquidation of their bonds and cash by foreigners by significantly raising interest rates. The only way out of the US debt to foreigners in his opinion is via higher inflation. For these reasons, Jarislowsky thinks the worse economic conditions are yet to come in the US.
Jarislowsky goes hard on the Canadian government stating that the country has been largely mismanaged and that there is no reason why our standard of living shouldn't be as high as the Americans. Apathy and low expectations are major problems in Canada and reasons why the government is not held to task. He would like the Canadian government to focus on long term economic progress for the country.
He concludes with his view that other parts of the world need to emphasize individual rights to create a force able to balance against the goverments power leading to economic progress.