Democracies and Mutual Funds

I was chatting with Rajiv today about politics and history and economics and came up with an interesting analogy.

We were talking about how monarchs can really do amazing things for a country if they’re good, but if they’re not good or just crazy they can really screw things up. In a democracy, by contrast, the people have the power but don’t necessarily know what they really want or how to get it done; things have to be voted on; nothing radical tends to happen.

So basically, democracy is like a mutual fund – low risk, medium return. Monarchy is more like an individual stock – more risky but with the potential for much higher returns. Democracies stick around while monarchies eventually get wiped out by a string of too many bad leaders.

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