Thread by @CapOrbit

A thread on authoritarian rule and outcomes for a country. These are thoughts that I had shared a few months ago with a group of investors:
-Most people do not consider base rates. How many such leaders ruled different countries and how many countries were successful?

1/n

When a large section of population is frustrated it is easy for a leader to cultivate hatred of a minority /xenophobia. Most are fine until the brunt is borne by somebody else. They basically have taken a long shot or what is called as a Hail Mary pass in American football.
2/n

Howard Marks had talked about risk and return. With higher risk, there is higher variability in returns. So, to begin with, people have decided to up risk levels by electing an authoritarian leader.

3/n

These people expect the large, positive outcome (further down the risk axis) without considering that things may get quite bad compared to where we are today (which may not be good to begin with). Strongman rule advocates dont see the potentially high downside.

4/n

It is like when a fund manager takes risky trades to juice up returns when the average approach has failed, People expect a strongman to do the job.

He may not.

5/n

The question then comes to the base rate of chance of improvement in development level of the country.

Until I last had this discussion, I didn't have hard data to back my intuition (after reading over time through historical examples in emerging countries)
6/n

A few days ago, Ruchir Sharma, had a good piece which filled in the blanks on base rates, with hard data. Have a look.

In frustration, I have heard many people say casually that only a strongman rule will save India.

Would you accept these odds?

@threadreaderapp unroll