When Hedges Go Bad

In early times, hedging meant protecting something, usually crops, by surrounding it with hedges.

Today hedging means to protect yourself from losses by avoiding a commitment, usually by supporting more than one side.

People or corporations who donate to both republican and democratic candidates do this all the time. So do gamblers who bet on both teams, and investors who buy stock in competing companies. In these cases, people are seen as "hedging their bets".

Pete Rose was banned from baseball for betting on his own team. Fans were horrified to learn that he sometimes bet against the Reds while he was manager.

But really, let's be honest, what baseball team wins every night? Winning 100 out of 162 games is considered a significant accomplishment for any team.

So from a gambling perspective, it makes perfect sense to bet both for and against one team. The same holds true for the stock market, which is really just a place to bet on financial performance instead of sports rankings. Not everyone can be a winner, so it's more profitable to spread your investments around.

But hedging a baseball bet and hedging on the economy are quite different. One is a game. The other is the financial backbone of the United States of America.

This is why I have problems with hedge funds. In particular, with political candidates who employ the practice.

Consider the following from the Boston Globe regarding one candidate's financial portfolio:

"In many cases, his investments are in funds that hold complex securities and produce profits whether companies succeed or fail, and whether the economy thrives or not."

Later in the article there is this forecast from the same candidate's investment advisors:

"a flurry of new borrowing in 2010 'will fuel a robust distressed cycle over the next 2-4 years, especially if the economic recovery remains relatively weak'.”

Pete Rose bet against his own team and was banned from baseball for life.

Now we have a billionaire doing the same thing with our economy and people are touting him as some kind of financial Mr. Fix-it? 

I don't get it.

Politicians and Their "Stories"

Other than John McCain and President Obama, there are few active politicians who have a story of substance to tell. Yet today every politician has a book. Here’s why it’s a bad thing.

First, few of today’s politicians actually write the books bearing their name and author photograph. The vast majority are either based on questionnaires written by ghost authors and fleshed out with conversations later on to “get the details right”, or such books are written by aides and supporters via talking points and cleverly-crafted recollections designed to appeal to a certain demographic or lobbying group.

This is  dishonest at the outset, a tactic to appeal to voters and rarely anything else. It also cheapens the accomplishments of those candidates who do take the time and actually write their own words. Politicians who employ others to write their thoughts don’t deserve the same level of respect, at least intellectually, than those who do.

Second, who has time to read all these books? If I read a book by every candidate I supported, I wouldn’t have time for much else, let alone reading something not connected to politics. That, and I’d have to publicly acknowledge that at one time I considered voting for Ross Perot. Despite this, the fact remains that when everyone does the same thing – in this case, writes a book – that thing becomes more or less expected. In time it becomes mundane and meaningless.

Third, it waters down true discourse. In some cases it drowns it out entirely. Americans are bombarded with information, so much so that many of us have become jaded and cynical to massaged “facts” and sound-bite news analysis.

Instead of investing time sifting through the available information to arrive at a logical conclusion, we are forced to block out the majority of the information, mainly to preserve our own sanity. From there, we allow in (or accept) that which is to our liking, a very passive activity. In other words, when we block out everything and later choose to allow only some information to become unblocked, it is because we are either attracted to this information in some way, or it has made itself known to us.

This is why today’s television commercials are so much louder than the rest of the programming; the only way to be heard above the noise is to be noisier.

Fourth, reading the individual stories, anecdotes, and opinions of our elected leaders only feeds into the cult of personality at the expense of real issues. Today’s electorate cares more than ever about the private lives of political leaders. So much so that too many would-be candidates shy away from the public arena for just this reason. It is also for this same reason why, when confronted with the choice, so many campaigns focus on the salacious details of their opponents lives over more substantive matters.

Last and perhaps worst of all is the arrogance factor.

Passively accepting a candidate’s stated platform based upon a book in which they have final say over is, at best, a conflict of interest. At worst, particularly if the book is a best seller, it leads to arrogance and an attitude of entitlement, as one’s opinions are rarely challenged. Instead of issues being presented to candidates as areas of concern for citizens, they are instead presented by the candidate himself, the very person who has to carry the work out. This is like a salesperson setting her own quota.

With this in mind, the (implicit or otherwise) encouragement for every candidate to write a book that outlines their philosophy is counter-productive, and a clear conflict of interest. Instead of focusing solely on themselves and their appearance, candidates should read other people’s thoughts, if for no reason other than to learn the art of compromise and perhaps demonstrate a minimum amount of intellect.

So what should the well-informed voter (or reader) do instead? Read that which pleases you. And share your thoughts with your elected officials, not the other way around.

Better yet, go write your own book.

The Presidential Election is on Tuesday, November 6, 2012.