Warning! this week’s article contains references to politics so you may want to look away now and come back next week!
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
- 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
l ose 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. 🙂