Have Americans Forgotten How to Debate ?

Customer: Um…now look…now look, mate, I’ve definitely had enough of this. That parrot is definitely deceased, and when I purchased it not ‘alf an hour ago, you assured me that its total lack of movement was due to it bein’ tired and shagged out following a prolonged squawk . . . This parrot is no more! He has ceased to be! He’s expired and gone to meet his maker! He’s a stiff! Bereft of life, he rests in peace! If you hadn’t nailed him to the perch he’d be pushing up the daisies! His metabolic processes are now history! He’s off the twig! He’s kicked the bucket, he’s shuffled off his mortal coil, run down the curtain and joined the bleedin’ choir invisibile!!
THIS IS AN EX-PARROT!!

–Monty Python, Dead Parrot sketch

Over the past few years, there has been a rather confused debate in the US. Indeed, there have been a series of confused debates, discussions, arguments, flame wars, political campaigns, claims, and counter-claims, most of which have never reached a satisfying conclusion. This is especially true in the fields of politics and economics. (Primaries and elections only reach a denouement because of a date certain, but the issues debated are not resolved).

We here in the USA have forgotten how to have an intelligent argument. I don’t mean a marital spat, I refer to the process of deciding issues through informed argument, discussion, etc. Somehow, zealous advocacy has been replaced with over zealous absurdity.

We seemingly have forgotten the purpose of debate — to engage in a principled argument in order to reach a discernible Truth. It is not, as seems to be occurring more often, to temporarily win, at any and all costs, in short term polling. These policy back-and-forths have become futile, time wasting rhetorical displays, not worthwhile even for their entertainment value.

John Milton understood the long term advantages to any society of pursuing the Truth through a broad and open debate. Thomas Jefferson argued that in “the marketplace of ideas,” the truth will emerge out of free competition in open and transparent public discourse. This was considered so important to any democracy that it was codified in the very First Amendment to the US Constitution.

I am not so sure that Milton or Jefferson would recognize what our discourse has devolved to.

One of the advantages of plying your trade on Wall Street instead of in Washington DC is that regardless of the never ending debate, there are metrics that suggest winners and losers. Stock markets go up or down, AUM increases or decreases, market capitalization rises and falls, companies gain and lose market share. Investing by its very nature drives some resolution to the great debates of the day.

Note I am not referring to the minute-by-minute or even day-to-day action, but the longer term results. Benjamin Graham famously stated that over the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine. We get some resolutions to the greater issues of investing — eventually, often following long periods of what looks like irrationality. Those lengths time when investors are irrationally exuberant or persistently pessimistic reflect a period of information dissemination, where eventually, group psychology coalesces around a specific investment posture.

DC has a similar mechanism — they are called elections — but they can be the result of so many other factors besides the debate on the great issues of the day, that we often do not seem to find any form of satisfying resolution. There are still people who defend their banking buddies by trying to pin the blame for the crisis on government policy; ongoing climate change denialists have turned their back on science and instead employ agnotology to persuade the public. Those people pushing for austerity continue to ignore the real results out of UK, Ireland, and elsewhere. Even here in the United States, there is disbelief that the slowdown in government spending led to the first negative GDP quarter since the recession ended.

But whether it is a debate on GDP or Government Spending or any other priority, it never seems to resolve in quite as satisfying a way as capital markets do.

In those markets, the key issue under debate is whether or not we are topping out, a Fed-driven but tired and pricey market at the end of a 5 year cyclical run. Or, are we starting a new secular cycle, a new economic expansion, with the credit and housing crises long behind us.

This won’t be resolved tomorrow, but I suspect we may not have to wait very long to find out which viewpoint is correct . . .