As a sequel to yesterday’s Palm Beach story, perhaps it would be worth leaving you in suspense about the relative merits of value investing as opposed to trend following… and reflect on the nature of our democracy.

Normally, you and I have better things to do than think about our form of government – such as wash the car or take the dog for a walk. But since the presidential election is on the tip of everyone’s tongue, like the taste of stale Gaulloise cigarettes and last night’s andouillette sausage, this seems like a good time to get out the mouthwash, rinse it around and spit.

The international papers are full of attacks on the American elections and its quaint “college” of electors, as well as chauvinistic apologia for the U.S. system of government.

But the foreigners miss the point, as they always do. They do not understand that democracy in America is not merely, nor even principally, a system of government – it is a system of mass entertainment. Wall Street and Main Street provide the bread. Washington and Hollywood supply the circuses.

That is why the contenders for the nation’s highest office are judged, not on their policies, (which largely make no sense and are understood to be nothing but lies, like the “Contract with America,” anyway) but on their personalities. Bush is perhaps too dumb and too inexperienced to be president, said the media analysts early in the campaign. Gore is, well, a bore. So the candidates spent the whole election not trying to come up with more attractive policies, but trying to prove that they could overcome their personal failings.

You have to admire the president of the Philippines, Joseph Estrada. According to the “International Herald Tribune”, he refused “to hold regular cabinet meetings… to read government reports, newspapers or magazines.” Instead, he spent his time – and I am not making this up – eating, gambling, drinking …and/or spending time with his several mistresses. Now there is a man worthy of a great republic!

Instead of cravenly pretending to do the people’s business, as Bill Clinton has these many years, Estrada minded his own business – rather well, it would appear. But instead of receiving the thanks of the many millions of people upon whose lives he did not intrude, nor whose domestic harmony or economic well-being he did not endanger, Estrada has been impeached. Yesterday, said the IHT, mobs – no doubt including many who voted for him – “Burned Estrada in Effigy”… which is probably some little town near Manila.

Surely some better form of government could be found – one that would allow a rascal like Estrada or Clinton to enjoy themselves in public office and still give the people the entertainment they pay for.

Democracy, like other forms of entertainment, requires “a willing suspension of disbelief.” And like most modern movies and stage productions, lots of make-up and special effects make up for a very weak plot.

In fact, the story line is as improbable as “Mission Impossible II.” To be more specific, the system rests on two big frauds and one grand illusion.

The first fraud is that democracy is a less murderous form of government than the alternatives, and hence preferable to all others. And yet, of the millions of people killed in all the world’s wars, most would have been eligible voters. The most deadly wars – by far – occurred after voting boxes had been installed in public buildings all over Europe and North America in the early 20th century. Almost all the combatants in WWII had some form of voting to justify their regimes. Both Hitler and Mussolini were elected – as were Roosevelt and Churchill, though I am not sure in what manner or when the English leader was selected. Stalin was also elected, more or less, receiving by far the strongest popular mandate of any of them, since few people dared to vote against him. And America’s most deadly war was fought between two of the world’s most Democratic governments of the time – the South and the North.

By contrast, the death toll in pre-Democracy centuries was comparatively light.

The second fraud is that the will of the majority is the closest we humans can come to a just order of society. But what majority? By what justice or logic does a tiny majority of barely compos mentis voters in Palm Beach, Fla., get to tell all the citizens of Texas how to run their lives? And yet, their ballots will decide how much of their own money Texans will be allowed to keep, what medicines they can put into their bodies, how their children will be taught and how many gallons of water will be used to flush their toilets.

It is also presumed that whatever the majority wants sits on some high moral ground, like the gods on Mount Olympus. But in fact, anyone with eyes can see that the mob acts more like swine than gods — sloughing around in turpitude, fantasy and self-seeking like pigs in a trough of swill.

Why should a majority of voters in urban areas get to boss around those in rural areas? Why should a majority of protestants get to tell a minority of Catholics, Jews and Rosicrucians what to do? Why should the plumbers and TV repairmen – voting with the majority – get to lord it over the framing carpenters? How come the teetotalers of one county get to force the drinkers into the next state to quench their thirst? The majority voter gets to demonstrate his compassion at someone else’s expense. He gets to tell others what to do, based on his own shabby principles. And he gets to profit from the efforts of others like an atheistic bum at a church supper.

It is all nonsense, of course. But democracy is supposed to be the best form of government by default; all other forms are even worse. Whether that is true or not, I cannot say. I have not lived under other forms. And the evidence is mixed. Certainly, taxes and the death toll were lower under the Hohenzollerns, Hanovers, Capetians and Hapsburgs. Whether they were as entertaining or not, I cannot say. But the uniforms and headdresses provided a relief from the plainness of modern rulers. Before democracy, rulers pretended to be superior to the great mass of mankind. Now they pretend to be the same.

But the monarchs deprived people of the electoral process… the entertaining illusion of choosing the man or woman who will be our national ringmaster for the next four years. And what a spectacle that is.

“Based on the results of the 2000 election,” says an e-mail message attributed to the “Jewish World Review,” “it’s clear many voters are so deeply disturbed that — for their own good as well as the national welfare — they should be confined to an institution.”

“Missouri voters elected a corpse — Gov. Mel Carnahan, who died in a plane crash weeks before the balloting.” The funny thing about this was that prior to his death, Carnahan was trailing Sen. John Ashcroft. Voters seemed to like him better dead than alive. Dying turned out to be good for his career.

The “Jewish World Review” also cited the New Jersey race, where voters who say they don’t want money involved in politics elected the biggest candidate ever – Jon Corzine, who spent $50 million of his own money to win a seat in the Senate.

Among the other peculiar trends mentioned were the votes for Ralph Nader, which should be grounds for institutionalization on its own, and Hillary Clinton’s win in New York.

Hillary Clinton deserves a special mention in the history of mass illusion. Here is a woman whose democratic pretenses do seem to reach almost Olympian levels. As she put it in her ode to democratic folderol, “It Takes a Village,”… “the government is all of us.”

Unlike monarchs or their subjects, democrats are prone to mass murder, mass suicide, mass larceny and mass fantasy. Trapped by the theory of Democracy, they must suspend their disbelief of the most preposterous and most easily disproven propositions, but are unable to open their eyes and see what actually goes on around them. Thus they are encouraged to think that they play an important role in guiding the ship of state and doing something really important with their lives. Just by reading the editorial pages, watching boring political talk shows and casting a ballot once every two years qualifies Democratic Man for a kind of good citizenship award which he grants to himself. This alone makes him feel very superior to all the rest of us who just want to be left alone.

But what is most appealing about American democracy is simply the baroque exuberance of it all, like the rest of American culture. The candidates are often idiotic, deadly boring or sometimes merely dead. The voters are foolish or apathetic. And the whole process can be as puzzling as the stock market… or as exciting as a street fight between two fat women. Either way, you want to stick around just to see what happens next.

Writing to you from the Eurostar, and returning to financial topics tomorrow (I promise!)…

Bill Bonner

On The Eurostar To London November 15, 2000

*** Mr. Bear is every bit as cagey as I suspected. Tech stocks – led by Oracle and Cisco – came back to life yesterday. The Nasdaq index rose 171 points – or more than 5%.

*** The Dow rose, too – up 163 points.

*** What caused the rise? Well, the election uncertainty is losing its unsettling edge. Investors looked into the abyss of political turmoil… saw the bridge of gridlock in Washington… and were pretty happy.

*** What’s more, there were no disappointing earnings announcements. So Mr. Bear saw his opportunity. He took a break. His whereabouts, as well as his next move, are unknown… but he is likely to be back soon.

*** In today’s paper, “NY Times” columnist Thomas Friedman provides an inadvertent explanation for Al Gore’s remarkable intelligence. Referring to the film, “Being John Malkovich,” Gore said: “That’s what I feel like… A guy whose head is occupied by all these people telling me what to do.”

*** The Internet craze seems to have peaked out. A Price Waterhouse study determined that people are spending less time on the World Wide Web – just 4.2 hours per week this year, down from 5.3 hours in 1999 and 4.8 hours in 1998.

The report, cited by Alan Abelson in “Barron’s” says that “fewer Americans are sending and receiving emails this year.” “And fewer,” Abelson continues, “are reading publications online, watching live events and participating in chat-room chatter.”

*** Addison and I are on our way to London – taking the Eurostar under the English Channel. So, we’re cut off from our traditional sources. We may even be tempted to make up the news, since no one really cares anyway. What difference does it make? But I’m just kidding. The real news is more entertaining than anything we could invent.

*** I searched “The Times” of London in vain this morning. I was looking for the usual story of “the naughty vicar.” Normally, U.K. newspapers can be counted on for a story about a preacher gone bad – preferably in the company of a Sunday school teacher or Bishop’s wife. Alas, either the vicars have straightened their laces or the press is getting tired of the story.

*** Take this item from the British press, for example: Professor Mo Malek, a health economist, has called on the U.K. government to tax fatty hamburgers as a deterrent to public obesity. He envisions a type of sliding tax on burgers, based on the fatty content thereof. The more fat, the higher the tax. Professor Malek blames the recent obesity epidemic that the United Kingdom is experiencing on a more sedentary lifestyle and the availability of fast food. Once you accept the proposition that the majority, or their agents, have the right to tell the rest of us what to do, it is only a matter of time before they boss us around in ways we never thought possible. But what the heck; I don’t eat fast food. So what do I care? Go ahead, tax the McDonald’s customers.

*** “Nasdaq intent on exploring London exchange alliance,” reads a “Financial Times” headline. “It makes profound business logic for the LSE and Nasdaq to do a deal,” says John Hilley, chairman of Nasdaq International. “There is a revolution in securities trading that is about to explode in Europe and it’s based on IPOs and retail trading.”

*** Meanwhile, Playboy Enterprises has postponed their IPO for scheduled for this week. “We do not believe,” Christie Hefner, Hugh’s right-hand woman, told the “Financial Times,” “that under the current market conditions we would receive a valuation that reflects the extraordinary potential of this business.” And pornography is said to be one of the most profitable Net businesses. If Playboy can’t raise the money they need from the market… who is likely to?

*** Mega-retailers Wal-mart and Home Depot, the two most closely watched retail chains, both report a “slowing in consumer traffic.” Best Buy, too, is feeling the heat. Grant’s Investor Eric Fry: “Best Buy’s same-store sales growth has begun to stall and management predicts that it will continue to slow. In an aggressive bid to counteract these adverse trends, BBY has launched an expensive bricks- and-mortar build-out that will increase its retail store count by 73% over four years. But the attempted cure may be worse than the disease. Certainly, more retail stores will produce more sales. But bottom-line improvement is far from assured. The company’s ambitious 25% earnings growth targets rely upon maintaining ultra-high gross margins, which reached a record 20.4% in the latest quarter.”

*** Technology companies, too, are hanging their hats on a near perfect future. “[T]he future of all this technology [is pinned] on wireless and wireless being the ‘killer app,'” writes Bill Fleckenstein. “My observation is that one of the main uses of all wireless doo-dads is to further the exploitation of the national pastime, which I long ago stated stock speculation has become, although it may be losing some of its panache as folks lose money.

“The way I see it, hand-helds of all flavors are mainly used so people can ascertain their stock prices and trade on-line. That’s not to say it wouldn’t be useful for e-mail if you are traveling, but let’s face it, a lot of things that wireless phones and things are supposed to be able to do can’t be done easily when one is on the move. The real killer app, in my view, is the stock market. So if one thinks the trading mania prospectively will diminish, that speaks volumes about how fast folks will lust after the new toys.”

*** Sitting on the train this morning, I am prompted to read Eurostar magazine by an alluring photograph of the Italian actress Monica Bellucci. Really, how can I resist? The headline calls her: “The Brunette Tornado.” I will take a look inside…. on your behalf, of course.

*** That’s too bad. Other than these exceptionally sassy photos, Eurostar magazine offers very little of interest. Wait, what’s this? Another headline asks: “Is Science Going Mad?” Give me a moment… I’ll tell you the answer.

*** Unbelievable. After reviewing the piece which covers topics as rich and deep as genetically modified foods, degenerative disorders and human gene-mapping… I am left only with the writer’s awe that this author managed to assemble words together for three pages… and say absolutely nothing.

*** On this day in 1923 it cost 200 billion German marks to buy a loaf of bread. In 1918, while the guns were still rumbling in WWI, a loaf of bread cost two-thirds of a mark.

The Daily Reckoning