Munger Says Watch Me Eat Cake

They say the bank bailout was necessary because the banks were too big to fail.  What is not made clear is that A system would have failed.  Just one of many system we could pick, a system we happened to have.  I say the bank failures were too important to skip.  Their failure would have ushered in a clearing of the decks and a starting over, a reset of the system, that would have benefitted us all.  Bankruptcy of the bankrupt is important in any system.

Certainly people like Charlie Munger would have suffered, if his system failed (well it did fail, that is why Charlie Munger had to be bailed out.).  He is a billionaire, and likes it.  We all like a system in which we happen to excel.

Charlie Munger is sharp as a tack and very familiar with the term and concept "survivorship bias."  We tend toward what we see as success, and then we are biased toward it, which leads to us organizing around it.  Those yet to succeed assume that is the path to success.  This in part explains such horrors as Nazi Germany.  By tolerating power grabs by ever smaller groups of people, such as with the hated bank bailouts, we invite the horrors that follow from concentrated power.  Munger knows this too, but he pulls out the Hitler card to trump those who do not think Munger should have been bailed out.

Nassim Nicholas Taleb, the probability theorist and market advisor has a wonderful book called Fooled By Randomness in which he uses the example of the good dolphin.  Throughout history there are stories of dolphins carrying drowning swimmers to shore.  The few dozen stories stories of such rescuees, being saved by dolphins from drowning, give us a warm and fuzzy feeling about dolphins.  What we do not hear about, are the drowning humans who hitch a ride on a dolphin, a dolphin that takes them out further to assure the victim drowns.  We never hear of the evil dolphins, since their victims tell no tales.  We do not take them into consideration.

The victims of the bailouts are posting murderous comments under the articles on Munger's statements.

Since Munger is successful, we wish to identify with him, and agree with him, in a desperate hope we can be successful like him (although we have no idea what his lifestyle is like, but we can project what we would do if billionaired.)  Never mind a system that fosters excess wealth hoarding necessarily also keeps the pie relatively static.  A system based on freedom would have a pie that grew with peoples' needs and desires, but would make it hard to accumulate extraordinary wealth, and in any event, never more than one generation.

People like Munger and Gates and others have huge followings, merely for their wealth, a function of survivorship bias.  In our system, in which the rich get richer and the poor poorer, someone will be "richest."  It is a matter of survivorship, and there will be a bias toward such survivors.

Our system violates natural law. Natural law is a truth that is accessible through reason. If truth was not accessible through reason, then our free will would have no purpose, for if we could not come to a point where a choice is to be made, then what is the point of free will?  To what purpose would we have a free will?  A choice when unaware of options is not much of a gift. The great choice in life is between good or evil.  Reason leads to a belief in a prime mover, and revelation is God's introduction of Himself.  Religion is how man organizes his response to revelation.

Atheists and Believers alike celebrate the wealthy, although it is unworthy of them given the gift of reason.  By reason alone we can know the system is wrong, and needs to fail.  We can do better. We can have free markets.

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