The other day I was walking down the park at night when I saw some teenagers hanging out around near a school. They were dressed with hoodies and caps, and as I went by they opened their spray paint cans and started painting a master piece on one of walls.
The only thing I could think then was this is too stereotypical. I then thought about betting my money on that they would have skateboards around. As soon as they were done drawing their misspelled artwork, sure enough they pulled out the skateboards. Could have won money easily. The next thought that came to my mind was how few degrees of freedom they had. In other words, how predictable they were.
Then the idea came to my mind, people and markets are not that different. A predictable market (one which you know what the price will be in the future) is a very inefficient market since it is not optimizing well the allocation of resources. On the other hand, a very efficient market is hard to predict since it is always at the right price given the available information. Because of this, it is impossible to predict whether the price will go up or down in the future.
Now how do the two relate? Well inefficient markets and predictable people have one important thing in common: They are easy to control. And why is that important? Because as soon as you understand this, you can take advantage of it. In the case of the markets, you can win money. In the case of people, you can get them to do things you want, or predict how they’ll react to your behavior.
More importantly though, an efficient market behaves ‘on its own will’, since no one is controlling the price; we could say it’s a free market. I think this applies to people as well. A person who is truly free is not predictable since it’s being controlled by no one else. And don’t get me wrong, being a graffiti-skateboarder-hoodie-teenager doesn’t necessarily implies predictability as long as it is a conscious decision. As a market with predictable cycles which reacts immediately to people taking advantage, a person who decides to follow a pattern consciously can always adapt to the circumstances and free themselves from the trend as soon as it is no longer desirable.
Donald J Trump is a political genius… or at least he might be. Over the course of the current presidential elections he has shown to be incoherent and to promote hate, fear, racism and other abhorrent behaviors. And you would think that such a candidate would never have a chance to win much votes. However the result is completely opposite: Trump is the leading GOP contender for the upcoming elections.
So let’s step back a little and do a small mind game. Let’s step into the shoes of a presidential candidate. What’s the objective of the game? To get as much votes as possible. So how do you get people’s vote? Well, you convince them that when you are the president you will do things that will benefit them. The problem starts when you understand that by favoring a group of people, you will be almost always opposing another group. In other words, you cannot keep everyone happy. Thus the logical way to go is to favor the biggest group in the room.
This approach is easier when you have a small number of voters since it’s easier to understand where the majority stands. However when you are running for presidential elections, it becomes nearly impossible to know which stance will warrant you the most votes. And hence the Trump strategy: instead of using the same stance everywhere, just modify it as you see fit to keep as much people as you can happy. This is why you can find videos of Trump contradicting himself almost for everything he has said.
Basically Trump is just a people-pleaser. The words that come out of his mouth have only one objective: to get more voters. And this is a big problem because when candidates start acting in ways which will give them the most votes, the side that ends up losing is the voters. In other words political campaigns’ incentives are not aligned with democracy. People should vote for the candidate they feel represent them the most. But when candidates start acting as Trump it becomes impossible to know which candidate will represent which ideology. Once one crosses the line, then the others need to follow in order to compete. This is also another example of why unbounded competition leads to undesired results.
And I know it’s hard to hear, but so far Trump has been playing the game pretty well. Whatever he has been communicating, it has struck with a lot of people, and has gotten a lot of votes. Whether these folks are dumb enough to believe exactly what he is saying, or whether they are voting because Trump has been the best at playing the game is something we might never know. However you see it, the phrase In a democracy people get the leaders they deserve has never been more true.
If you want to read more on Trump’s thoughts and ideologies, this book is a great reference to understand his frame of mind
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