After being paid to study the performance of politicians for the past 35 years it finally occurs to me that the problem with democracy is the same problem we have with competition in markets: for it to work well requires more effort and attention on the part of voters (or customers) than they're prepared to devote to it.
The similarity between democracy and markets is hardly surprising because they're both forms of competition. Businesses compete for our custom, political parties compete for our vote.
With the competition between, say, the Big Four banks, we expect to sit back while they compete with each other to attract our business, and this process produces the highest quality service at the keenest prices.
But it never works that way. Unless we pay close attention to the deal we're getting, unless we shop around and are prepared move our business to get a better deal, we don't get a very good deal at all.
It turns out that competition in markets is a two-way street: the customers have to put a fair bit of effort into making it work. If they don't, the banks will still compete with each other, but they'll do it in ways that yield the customer little benefit - advertising and phony product differentiation.
And I now see that competition in politics works much the same way. Unless enough of us pay close attention to what the pollies are doing and saying, they'll find ways to compete that are easier for them and less beneficial for us....MORE
A good catch by Big Gav at Peak Energy
*From our comments on the May '09 post "Paul Tudor Jones Interview at Institutional Investor":
...The advantage and disadvantage of global macro is It Is Not Easy. You have to pay attention and you have to understand the interrelationships of many markets and politics and weather and psychology and be facile in both words and numbers and in an ego-driven business be humble enough to learn the lessons the market will teach you.
It really helps to not take yourself too seriously, both to avoid the temptation to impose your will upon the market and to maintain enough perspective to spot opportunities ahead of the crowd.
Because global macro isn't easy the rewards can be tremendous.
And from our Dec. 31, 2008 post "2008: The End of the Beginning":
When in doubt, lift a quote snippet from Churchill.
On Sunday, September 14, 2008 I put up the post below. It was the night before Lehman Brothers filed their chapter 11, two days before AIG became a 79.9% subsidiary of the U.S. Treasury and a week-and-a-half before Washington Mutual was seized by the OTS and put into receivership:
One Way or Another We Will Get Through ThisI've got to get some rack time but before I head out I'll get a little more personal than I usually do. I have been at the market my entire adult life and have seen the best and worst of human nature. To augment personal experience I have studied and read tens of thousands of pages, everything from popular histories to incomprehensible academic works.
The one lesson worth knowing is: "There will always be opportunity". It may not be easy and it may not be fast but the opportunity is there every morning. The place to start is to PAY ATTENTION. That alone will get you into the second quartile.
Take a look at the first decade of the last century in the chart below...