subject: Democracy Leads To Chaos [print this page] Between 1999 and 2002, former Wall Street trader and investor Jim Rogers drove with his wife through 116 countries, covering 245,000 kilometers, in a custom-made Mercedes.
He explains which countries he would invest in and why - and which ones he wouldn't touch with a barge pole.
I had read his 1991 book 'Investment Biker' whilst in the Maldives earlier this year, and I wanted to see how his perspective had changed in the 14 intervening years between his two books.
On page 265, Rogers talks about how impressed he is with Singapore. "You will not find another city in the world that is as rich and as safe as Singapore."
He then points out that the country is under the absolute, authoritarian rule of the country's first prime minister, Lee Kuan Yew (he governed Singapore for three decades, retiring in 2011).
Rogers then makes this fascinating comment:
"[The Greek philosopher] Plato argued in 'The Republic' that there are four stages in the evolution of nations: from dictatorship to oligarchy to democracy to chaos, and back again.
The Chinese, whether or not they have read Plato, operate on the same principle. They see it as the Asian way. A strong central government will lead to prosperity, and the first few who become successful will maintain the stability of society until the government of the few gives way to democracy.
But an unfettered democracy, as they see it - and Plato argued- will inevitably give way to chaos. Until, of course, a new dictator emerges."
As I contemplate the chaos that is Greece, trying to emerge from decades of corruption allowed in a Democratic system, I marvel at how Plato had predicted the inevitability of this situation 2,300 years ago.
In a democracy, politicians have to pander to the whims and desires of vastly divergent interest groups. The end result? Corruption on a mass scale and chaos.
Will We Have a Dictatorship in Europe?
"With escalating fears regarding the stability of the eurozone, former commodities broker and current MEP Nigel Farage predicts that there will be an attempt to install a dictatorship in Europe." (you can find this article in yesterday's newsletter here)
In another recent article, Simon Black makes a case for how Democracy works well for small countries, but leads to chaos in larger countries.
Small Countries Are Thriving
"I enjoy strong, vibrant economies where optimism and opportunity dominate the scene- not chaos and negativity.
There are a lot of places around the world that fit this mold- their economies are healthy and people are legitimately confident about the future.
From Estonia to Hong Kong to Andorra to Singapore, there are common elements in these countries that have greatly contributed to their success:
1) They're small.
2) They have governments that generally stay out of the way.
An obscure 20th century economist named Leopold Kohr wrote extensively about these factors; my colleague Tim Price introduced me Kohr's writing last year, and his 1957 book The Breakdown of Nations has proven quite prophetic.
In the book, Kohr extols the virtues of 'smallness' and indicates that most of the political challenges in the world- military over-extension, debt, poverty, bureaucratic stodginess, etc.- are caused by the unsustainable expansion of nations.
For Kohr, it is simply a matter of scale. Once a country becomes too large, any system of government will become oppressive.
Small countries, conversely, don't have the resources to wage wars or build huge bureaucracies. They're forced by circumstance to allow the market to work and the private sector to flourish.
Singapore and Hong Kong are great examples. They're not waging wars, dropping bombs, or establishing far flung military bases. Both countries are devoid of any natural resources, and their only means of survival and success have been to step out of the way and let the market take over.
In a matter of decades, they have become two of the most prosperous nations on the planet, and remain among the healthiest today."
This is one of the reasons why I chose Cyprus in 2007, and why a lot of laptop entrepreneurs are moving to places like Cyprus, Hong Kong, and Singapore.
Interestingly, after driving through 116 countries, Jim Rogers left the USA and is now based in Singapore
