If someone forwarded this to you, my name is Paul, you can read about me here. This Substack grows via word-of-mouth, so please forward to your friends. If you like this writing, you will enjoy my books Master, Minion and Raising a Thief as well as the podcast.
“A dash of apocalypse or revolution livens up the market, and were it lacking it would be necessary to invent it for commercial purposes.” Milosz.
When I evaluate the quality of my investment decision-making, the thing that stands out is excessive pessimism. At several junctures, I tilted my portfolio too heavily toward the risk of things falling apart, like the short SP500 futures hedges I had on for the back half of 2022 and still hold today.
In reality, things rarely fall apart. Banks and money managers selling risk management products would like you to think they fall apart more often than they do. Ditto breathless financial news. Things come close to falling apart, but they generally don’t.
The trick of course is that sometimes they in fact do. When I say “fall apart” I mean a fundamental break in the system, like the 1917 Russian Revolution or Hitler taking power in 1933. In 2008, we came very close to things falling apart, but in the end, they didn’t. The same thing is true in our personal lives. Generally, things work out. Except, rarely, when they don’t, which is exactly what my first book is about.
It is through this prism that I am processing protests in France and Israel and polls suggesting Trump will return to power. In France and Israel, anger is focused on the structure of government. On the scale of system threatening to not, Israel ranks higher than France because making a fundamental change to the structure (ending the Supreme Court’s independence) is materially different than Macron using an existing structure (article 49.3) to push through unpopular but necessary reform.
Meanwhile, Trump has a bedrock of fervent support. As the polls below show, he leads both Biden and DeSantis. Presumably, his supporters would like to give him the leeway Netanyahu sought. Like the protestors in Israel, I fear Trump will disrupt fundamental civic agreements, like settling debate via a vote.
Source: Five ThirtyEight
Source: Real Clear
Org Charts and Money
Protest symbolizes a rupture. These ruptures are ancient and constant. In some countries, like France, protest is even a national ritual.
“It is a long tradition, a constitutional right, and probably a manifestation of the French democracy,” said a Paris-based friend. “It never really turned to civil war per se (except 1789 probably).”
In France, many Parliamentarians must know the pension age has to change but instead choose to blame reform on the evil Macron and thus shield themselves from the hatred of irate voters. Below is a list maintained by the Carnegie Endowment for International Peace of significant protests in the last few years. The list is organized from newest to oldest and filtered by size. Each protest has a stated reason.
Carnegie’s own notes indicate that in most cases protests change nothing. So perhaps some protesting is merely exercising the right to protest. China doesn’t appear on these lists, for obvious reasons. More Russians would have protested the war if the consequences of doing so were not so dire.
These protests are mostly about a) organizational structure (Israel, Poland, Myanmar, Mexico, Russia) or b) how to split the money (France, Spain, India). Arguments about such issues aren’t surprising. The key question is if either side wants to fundamentally abandon existing structures.
The Incredible Wealth Generation Machine
It’s hard for me to understand why someone in most of these countries would want to destroy the system if one measures its effectiveness in terms of the wealth and longevity of its citizens.
Keep reading with a 7-day free trial
Subscribe to Things I Didn't Learn in School to keep reading this post and get 7 days of free access to the full post archives.