Hobson's Choice
November 20, 2018·7 comments·In Brief
Global trade volumes have reversed course since 2014, revealing a fundamental shift from international cooperation to competition. Yet consensus narratives suggest everything remains stable. The gap between what's observable in the data and what's being communicated through official channels reveals something darker: investors now face a constrained choice where acting conventionally has become the only reputationally and legally safe option.
- Export volumes across every major economy peaked in 2014 and have declined since. This isn't an interpretation or a matter of perspective. The World Trade Organization data shows Japan and China's export volumes flatlined for over five years before rolling over. The US and Europe followed. Yet the narratives around global trade stability persist unchanged.
- Central banks responded to this contraction by abandoning any pretense of coordination. The Fed tightened while Europe and Japan devalued currencies, creating a competitive dynamic where every major player adopted tactics once considered taboo. This mirrors the game theory of all-out competition: once one principal player defects, the equilibrium collapses and all players must follow.
- Policy-driven markets are now becoming policy-controlled markets. When central banks began purchasing corporate credit directly (not just sovereign debt), they eliminated the most effective hedge against systemic risk. The tool has been taken off the table entirely, and what's off the table today becomes illegal tomorrow.
- Investors face what appears to be choice but is actually constraint. Conventional wisdom dominates every investment menu: stocks for the long haul, focus on fundamentals, buy quality. Question these assumptions and you risk losing clients, your reputation, and your business. The Hobson's Choice isn't between two bad options. It's between one option and nothing.
- The real question isn't what to do within these constraints, but whether the constraints themselves are worth accepting. Time may no longer work in investors' favor. Institutions may continue manipulating markets for political survival. Domestic political shocks could dwarf any policy response. What happens when the conversational choices themselves become unmoored from reality?
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Comments
As always, you provide a smart historical, intellectual and practical framework to my less-thought-out reason for not voting for T or H in '16 which was that both are an insult and voting for them would only encourage both Parties to think it’s okay to insult me.
It’s why not voting (I voted libertarian, but considered not voting at all) is (or can be) a volitional choice full of meaning and messaging. Which is why the whole “get out and vote” narrative with its condensing nudging drives me nuts.
Step back and it’s very obvious that the “get out and vote” campaign is fully in support of the existing two-party structure. It reduces the odds of an eventual third party event and it placates the people as they think “I voted, I did my part” and/or as it numbs the anti-party instinct as in “I can’t really be against the thing I voted for.”
True story: Years ago Every Wednesday morning at 10 AM I would eat at a Jewish deli in Chicago. These were mostly older people and the language spoken was primarily Yiddish. Every Wednesday I would order lox bagel and cream cheese with coffee. One Wednesday morning I happened to get to the restaurant at 11AM. A new waitress approached my table and with some trepidation I gave my usual order. And what soup would you like, she asked politely. I don’t want soup, I replied. Just my order. But you must have soup she asserted. Look, I said, I come here every Wednesday and have the same order. Why do I have to have soup today. It is lunch hour she said and soup comes with your meal. Frustrated, I jumped up on a chair and began shouting “alright! I’ll have lox and bagel and cream cheese and chicken soup. Hold the soup, hold the bowl, hold the spoon!” The old people around stared with some amusement as the waitress ran away and the manager paid for my lunch.
Like that one Ben.
“Want your political party to put forward better candidates?
Then stop voting for the crappy ones.”
(These comments are directed primarily (until the end) at elections for the top federal office but apply somewhat to the larger states.)
This is the WORST part of “Take Back Your Vote” - and why?
Because the BEST part of that section concerns non-voting participation.
Because short-term results under current laws and procedures and structures can (arguably do) impair future such activity; because not voting against an extreme candidate can tilt the playing field far away from representative democracy; because in the short-term, the long-term can be lost. This is not fantasy - this is history.
The best, most appropriate second line of the above is “Then get out early, in the primaries, with words and actions and hand-shaking and free-form discussion, with or without partisans, and say WHY the candidates are inadequate or even dangerous. Remember - your individual vote is the LEAST important part of participation, as long as you PARTICIPATE.” OK, that’s a lot more than one line - maybe just “The get out and tell everyone WHY - and please get behind someone who CAN do the job!” Still too long and not easily quoted. Not my skill, apparently.
But I’m in California. I did that here. It didn’t matter. My presence or voice in the southeastern US would not have mattered (for President). There really is a problem with our process for electing the top spot - a very serious one-person-one-vote problem, a problem that only a significant amendment could resolve, and that is not forthcoming. Refusing to vote for the lesser of two evils is self-defeating in way too many cases.
So I will continue to vote AGAINST incompetent, unprepared, potentially autocratic candidates at all levels - including and especially my own town council (Los Altos, CA) and other regional and state offices. Long-term gains will not be accomplished by ignoring short-term risks.
That said, I still like the original long post and some of what this brief says. Keep it up!
Your 2nd and 3rd paragrapsh are spot-on. I’ll just ignore the first one, since sending a message to the parties by your vote is one thing denied by Ben (I think).
Voting with your feet sends a much more powerful message than voting with your ballot. This is something I’m struggling with myself. I’ve done all of the above as well. I support good candidates as best I can financially, and hosting fundraisers, working polls, putting out signs, etc. I make calls and raise money, the whole nine yards. I live in a state where it became clear this last cycle that I am a vastly minority thinker in a vastly minority party. So I voted with my feet and I left my party. I don’t know if that’s enough, but if you can’t change it then the next logical step would be to move. I don’t know how bad it has to get to motivate me to do that.
Replying to this note to bring it back to the top of the list. I was thinking about false binary choices as I pondered the Powell/Brainard non-choice and the importance of the same to the markets (judging by the amount of air-time and importance this got over the last couple of weeks).
It is exactly the same feeling I have when voting in presidential elections. Regardless of who is chosen it is gonna be more of the same for another four years. By the time I am presented with a “choice” - the field of options has been winnowed down purposefully by those that don’t want me to choose.
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