A stock operator's thoughts and ideas about market principles
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Aug/26/2007
The Political Equilibrium and Unpredictability
Very often elections end up close to 50-50 and the outcome is impossible to predict beforehand. I think this is a healthy sign and an indication on the political system being in a stable state, or equilibrium if you like. However, it also means that the outcome is random.
So if the outcome is random, i.e. flipping a coin would be a just as good approach, then what does this say about democracy? I think an election has very little predictive power, in the sense of choosing the ones who will be the best for the country the following years. On the other hand is democracy good at removing what has turned out wrong. The idea is that those in power will change mistakes of their predecessors, yet let the good things remain.
The resemblance to natural selection is clear. Out of many random mutations, only the best remain in the genetic pool, and the only way of finding the best is through survival of the fittest. Science works similarly, where more or less qualified hypotheses are being tested, and only a handful survive.
Since society changes, so must politics. Because of the 50-50 diversification between left and right parties in equilibrium, the definition of center will change as society develops. By looking a few decades back, at least here in Scandinavia, the Social Democrats as of today are much further to the right than earlier - yet they are still undoubtedly being regarded as leftists.
I believe this is natural as the long term drift in society is toward more and more liberal markets. Technology enables markets to be beneficial on places where government control used to be the best, ref. 'Put Our Roads on the Stock Market'.
In the short run however, politics is as random as the stock market. A political career is as tough as the one of a trader, I guess. A trader makes predictions in the ether of unpredictability. A politician gets elected not by what he will do, but by the collective illusion of the impact from his use of power. Further will the elected politician have to make actions in the same ether, and the stock operator's wealth fluctuates from the market's collective mind.
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