Building Blocks of a Wealthy Society: #2 Democracy


In Part 1 of this series I explained that The Escape Artist is not a self-made man.

There’s that old saying it takes a village to raise a child. Well, it certainly takes a society to become wealthy.

A society becomes wealthy when the following building blocks are in place:

  • Free speech
  • Democracy
  • Free markets
  • Free trade
  • The rule of law
  • Property rights
  • Protection of minority rights
  • A legal system independent of government

Now in Part 2, we are going to talk about democracy which has been in the news recently. As I explained in No News is Good News, normally you shouldn’t watch the news because its DEATH mostly alarmist nonsense designed to grab your attention and scare you.

But I would agree that there’s been some news recently in the UK that merits attention.  For those of you that haven’t been following (and I wouldn’t blame you), something called “Brexit” has been causing a lot of people to lose their shit become over-excited.  

We need to understand Brexit to use our votes wisely in elections. And on this subject, The Escape Artist is neutral(ish). I’d even go as far as saying open-minded. I voted remain in the referendum. But after the vote, I accepted the leave result. You could say that “my side lost” in 2016 but I don’t see it like that because I never attached my identity to the outcome.

How can you tell if you have attached your identity to Brexit? Check your social media profile. If your Tweeter / Fakebook profile says something like “LEAVER / REMAINER [delete as applicable] UNTIL I DIE…then you may be over-invested in the subject.  The cure is a nice cup of tea and a lie down in a darkened room.

Here’s the thing…I have mixed views about membership of the European Union. Yes, we’ve had no wars in Western Europe since 1945 which is nice. But do we really want an ever-closer union with a European army etc and to be ruled from Brussels as a small cog in a giant bureaucratic machine?

Liberal democracy in much of Europe is a pretty recent state of affairs. Portugal was run by military dictatorship as recently as 1973. There was an attempted military coup in Spain in 1981 (yes, 1981 not 1881) .

In contrast, Britain (for all its flaws) has progressively built a democracy over hundreds of years since Magna Carta limited the powers of the monarch in 1215. That does not mean “we” are better than “them”…but it does mean that our democratic traditions and legal systems are different.

The truth is that no one knows whether leaving the EU will ultimately turn out to be a good thing or not. Assuming we leave (which is not certain) the effects will take years to play out and, in the real world, cause and effect are often hard to see clearly.

With all the hullabaloo of last week’s events, we need to distinguish between the noise and the signal. What do I mean by noise and signal? Well, when you are on the phone to Auntie Edna in Australia, the crackle on the line is noise and Auntie Edna’s voice is the signal.

Firstly, the noise. Brexit is a good example of how addictive drama can be. You can see politicians and journalists fuelling the melodrama and feeding off the attention that it brings. Politics seems to be mostly for people that crave attention but weren’t good looking enough to be actors or pop stars.

Then we have the signal. In a world of Fake News and manufactured outrage The Supreme Court ruling last week was genuinely ground-breaking news: it may be an event that future generations of history students will learn along with milestones such as The Bill of Rights in 1689.

The attempt by the current Prime Minister (emphasis on the current as he won’t last long if he carries on like this) to shut down parliament was clumsy and undemocratic.  That the Supreme Court intervened and over-ruled it is something to be celebrated.  It was a big brave call and I think we owe the judges our gratitude.

[As a side-note, if I were Scottish I would also celebrate the fact that the UK Supreme Court upheld the “unlawful” verdict of The Scottish courts.]

We have a system that has been proven over the years to work in times of stress and crisis and we should all respect that. We need to keep reminding ourselves how many people in our history died fighting for democracy.

Last week’s decision of The Supreme Court placed clear limits on the power of the executive and set a precedent for the future.  As I explained in Bring Home The Revolution checks and balances like this are essential to a free and democratic society.

I understand the frustration of Leave voters but winning a referendum 52:48 does not mean that the majority should be able to ram anything through without limits.  When the Founding Fathers wrote the American constitution they realised that it isn’t enough that the majority get to elect a government; they deliberately designed-in checks and balances to prevent a tyranny of the majority.

So political deadlock is often a feature of a well functioning democracy. Deadlock may not look pretty but its childish of voters (and misleading by journalists) to lay all the blame on politicians.

Firstly, we get the politicians that we vote for. So its no use just moaning about those politicians. And, secondly, occasional deadlock is part of the process of a democratic system. If the public vote 52:48, should we be surprised when there is near-deadlock in Parliament as well? The current splits in parliament (and within political parties) reflect the splits in public opinion. It is what it is.

Democracy is messy.  Churchill called it the worst system of government…except for all the others. It’s slower than dictatorship. Democracy requires deals, discussions and compromises and those have been lacking over the last 3 years.

Brexit also provides a good example of how people can lose their minds as part of crowds. Strong emotions are contagious. Part of a professional investor’s education should include reading Extraordinary Popular Delusions and The Madness of Crowds by Charles MacKay.

What is an effective antidote to madness? Perspective.  Perspective means taking the helicopter view of whats going on.  You know when you are on a plane that takes off you rise into the sky and the airport buildings, roads, cars, people all shrink down to the size of toys.  You have perspective. Things that may seem like big deals at ground level are revealed to be trivially small in the wider sweep of things.

You can get perspective by looking at history. History tells us that we have successfully dealt with far worse problems than Brexit in the past.  This too shall pass.

History also tells us that democracy can take centuries to build but can be destroyed in a few months. Sadly, there’s something about human nature that makes democracy seem boring and revolution seem cool. The problem is that in real revolutions people die. 

In a country of ~70 million people, there will always be several hundred thousand people that just want to burn the system down whatever the consequences. The Labour Party is currently led by what one trade unionist calls Toytown Revolutionaries.  Playing at revolution is fun for middle-class Kool Kidz on student demos.  As any long-suffering parent will know, its all fun and games until someone gets hurt.

To be fair, Jeremy Corbyn is the result of the internal democracy of The Labour Party.  In 2014 the rules of Labour leadership elections were changed so that non-members could take part in leadership elections as supporters by paying a £3 fee.  In a classic example of unanticipated consequences, that opened the door to a remarkable coup. 

Hundreds of thousands of activists signed up in the run up to the 2015 Labour leadership election. The numbers are astonishing. If 250,000 people co-ordinated by Momentum pay £3 to be able to vote, you can take control of a major established political party for £750,000…roughly the price of a modest family home in outer London.  Was a major political party in a western democracy ever bought so cheaply and so easily?

Moving on, the main point of this article is to remind ourselves how democracy works. It’s not an argument for my point of view on Brexit.

But since you ask (ahem) my own preference would be to adopt Switzerland’s relationship with the EU. We would leave the EU as quickly as possible. We’d be safely out of the way of the federalist ambitions of the European Union but would retain access to the single market…at least for a period of say 5 years while things settle down. After 5 years we could then review how that was working and reassess.  Evolution is better than revolution.


Entertaining as all this Brexit lark is, it’s a distraction from your pursuit of financial freedom. To be effective, you have to focus on what you can control. 

Here’s the problem: you can’t be tracking your spending or working on your next promotion if you’re sat glued to each twist and turn of the Brexit soap-opera.  Soap operas often run for years. It’s anxiety provoking for many and that’s not helpful.

I will leave you with this thought. Although the current situation looks like a farce, democracy is supposed to be messy and slow at times. That’s a feature not a bug.

It will probably all work out OK in the end.  Until then, we just have to keep calm and carry on.

Dear readers! You are welcome to leave a comment and are allowed to agree or disagree but angry rants etc will be deleted so are probably not worth it.  🙂



Financial Coaching




  1. MRS SARAH J HEARN · · Reply

    Actually, rather than a RANT – your post has calmed me in a zen-like way. As someone put it recently, Brexit is a trade deal – it should be on page 4 of the Financial Times. Everyone should ask themselves – how excited have you ever been about an international trade deal before now?

    1. yes! that’s a refreshingly different way of looking at it 🙂

      1. Although we’re three and a half years in and the Trade Deal discussions haven’t even started!

  2. […] TEA weighs in on politics (13) […]

  3. Seeking Fire · · Reply

    First time commentator. That was a very balanced article and I enjoyed reading it. Probably because I entirely agree with your view.

    I voted remain, on balance, but think we need to fulfil the result of the referendum asap. I favour EU minus, common market +, switzerland model etc whatever. Seems to fill the result of the referendum. Don’t think it is as good as we’ve got currently but hey that’s democracy for you.

    Must admit myself not feeling particularly excited about voting for any of the parties, loony left, rabid right, democracy deniers in the centre left.

    A side note, i have a pet theory that there is a reasonable prospect in 10 – 15 years time, our children (as adults) will be discussing whether democracy is the best system. This will be based on the fact that China has become the most powerful nation and is clearly not a democracy. In fact many of the fastest growing nations are indeed not democracies – Mynamar for one. Anyway, I sincerely hope I am wrong.

    I also agree Brexit has limited relevance to FIRE. Corbyn government…mmmmm

    1. Thanks! gotta love a bit of confirmation!

      For what its worth (not much) my prediction is that China will at some point loosen its current 1984 style totalitarianism. If the middle class can travel, watch Hollywood films, western TV etc, access the internet, see what’s happening in Hong Kong then at some point it becomes unsustainable…we’ll see

  4. Solid article as usual, thanks TEA. I also don’t know (and don’t know anyone who does, regardless of what they say) whether Brexit will be worth it in the end. I do know, however, that it will NOT be worth it if it comes at the expense of our democracy.

    Trust me, this first-generation immigrant knows what it’s like to live in an autocratic society and it ain’t pretty. So well done to the courts for keeping us on the right side of the line – for the time being.

  5. Top notch as always. As a “leaver” residing in NZ I do find the whole Brexit thing pretty embarrassing to be honest. But as you said democracy is slow but it’s fair.

    1. Thanks! I know what you mean about embarrassing but that is the (subjective) meaning that we choose to attach to (objective) reality.

      We could also see the mess as evidence of genuine democracy which compares favourably to 1) Totalitarian China (see above) 2) More controversially, other European countries whose population voted “the wrong way” in referendums so the elite repeated the vote until they got the result they wanted(!).

  6. Daniel Julian · · Reply

    [As a side-note, if I were Scottish I would also celebrate the fact that the UK Supreme Court upheld the “unlawful” verdict of The Scottish courts over the “lawful” verdict of the English courts.]

    Not correct. The English high court did not rule the prorogation ‘lawful’ they didn’t make any verdict one way or the other on the lawfulness of prorogation.

  7. “[As a side-note, if I were Scottish I would also celebrate the fact that the UK Supreme Court upheld the “unlawful” verdict of The Scottish courts over the “lawful” verdict of the English courts.]”

    That’s not quite what happened. The English High Court said it wasn’t something on which they could pass judgement. They didn’t rule it was lawful, they just didn’t consider it further and, importantly, allowed appeal to the Supreme Court. A technical point but an important one in the context of the Scottish versus English verdict, I think.

    1. Thank you for the correction -I have amended the wording in the article

  8. “But since you ask (ahem) my own preference would be to adopt Switzerland’s relationship with the EU. We would leave the EU as quickly as possible. We’d be safely out of the way of the federalist ambitions of the European Union but would retain access to the single market…at least for a period of say 5 years while things settle down. After 5 years we could then review how that was working and reassess. Evolution is better than revolution.”

    Exactly (maybe not Switzerland given its legally complicated relationship, but Norway). If Theresa May had just said: first things first, let’s leave the formal political structure and then think about the next stages if we’re still not happy, it would have probably passed through Parliament. I think the public would have got behind that too. But she decided to start drawing bold red lines to keep a small minority of her party happy.

  9. Norfolk · · Reply

    3 decades of neoliberalism have rendered empathy a mocked leprous status for most people, so those with the power directing the history now in the making will call those capable of it snowflakes.

    Being older, I still tend to feel very sorry for the innocent being served up for entertainment, namely the roughly 5 million Europeans (including the Brits in all the other European countries in this figure) who have been living an easily avoidable purgatory via institutional indifference for more than 3 years now, still not knowing if their lives are going to be ruined. The tyranical majority have ruled them invisible and irrelevant, cruelly disenfranchising them as political hostages.

    Between those who want radical change no matter the cost, and another significant number who have jammed the fence firmly between their buttocks, you have the national empathy deficit ratio. The judgement is that they brought it on themselves by seeking to live so differently, if they’d just totally conformed like the majority now, then they wouldn’t have any problems, would they?

  10. Good article TEA. Although I was in favour of leaving the EU, I too refused/refuse to attach my entire identity to the outcome of the referendum and understand that these things are a matter of degrees. In fact, I still am what USED to be called a ‘Eurosceptic’, when all of this was regarded as a minor and utterly mundane bureaucratic issue, of interest to only a tiny minority of people specifically effected by it. I haven’t heard the word in years! Sadly the Twitter mob have got hold of it, labelling us all ‘Brexiteers’ or ‘Remoaners’, etc, etc. Childish language for a childishly conducted debate.

    On another more worrying note, I have met several people who have been so terrorised by the whole affair that they are putting off major life decisions because of it. For example, one individual I know by acquaintance is avoiding any investment (or buying a property as planned) ‘until Brexit is sorted’. I could only advise him that he would be waiting quite some time! My suspicion is that we will still be talking about this f*cking issue twenty years from now. I pointed him in the direction of some FI blogs to try and help him regain some perspective, but I don’t suppose he was paying attention. Very distressing to see.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: