First, businesspeople struggle to understand fanaticism. In commercial life, all actors are negotiable, even if their price is high. You might pass decades in the private sector without encountering someone who has total commitment to an abstract doctrine (socialism), to an individual (Trump) or to a cause (Russian amour propre). This blind spot for zeal is why corporations were such sitting ducks for “woke”. And why oligarchs a generation ago thought Vladimir Putin was their pliable instrument.
Read the wry but bitter diaries of Chris Patten, the last governor of Hong Kong. The bane of his life was British merchants who thought even tentative democratic reforms would provoke the mainland into squeezing the island. That, as it turned out, not much provocation was needed, that communism was its own warrant, somehow eluded their transactional minds. But of course it did.
This mental glitch applies to business as a whole. But there is another that affects the most successful exponents in particular. The self-made super-rich tend to grossly overrate contrarianism.
Dissent is core to financial success. Why buy an asset unless you think the market has underpriced it? Why set up a business unless you think the world is wrong not to have offered that product or service already? Opening the humblest corner bistro is, in essence, a statement that everyone who hasn’t opened one there has missed a trick. Imagine how much stronger that contrarian impulse must be in a hedge fund seeking above-market returns.
All power to this attitude. The world would be less prosperous without it. But it doesn’t transfer well to public life. In politics, if you support a radical proposition and turn out to have misjudged it, the consequence might be, oh I don’t know, societal ruin. (Or deaths in the Capitol.) There is no equivalent of limited liability. There is no equivalent of the circuit breakers that the state puts in place to contain bad business bets. The state itself is on the line.
Consider the question that Peter Thiel is said to ask entrepreneurs seeking his capital. “What important truth do very few people agree with you on?” Whatever its All Souls entrance paper vibe, it is a good question, within its domain. It tests the aptitude for original thought, without which it is hard to make serious money. Blackstone might just as well ask it of an aspiring portfolio manager.
The trouble starts when this valorisation of the dissenting view strays into politics. It doesn’t just result in an undergraduate insolence that is unbecoming in middle-aged men and women (one partner at Sequoia Capital is pro-Trump because he doesn’t “drink the media Kool-Aid”). It leads to cavalier action and a mispricing of risk. The tail event in politics isn’t financial oblivion. It is oblivion.
Every day, when I get up at the crack of noon, there’s an email from a media organ called UnHerd, which, as the name implies, deals in contrarian views. It is of course hedgie-backed. The thing is, I don’t see how this mental habit is avoidable. Self-made tycoons are, almost by definition, people whose moments of iconoclasm have worked out. We can but hope their judgment is as sound when being wrong entails something worse than a sheepish call with investors.
Written by: Janan Ganesh
© Financial Times
