How much are you willing to pay somebody to decide and cast your vote?
No, this not a question that typically would cross our mind. In fact, many democracy advocates may become pretty disgusted that the question got to any form of deliberation. “No, you’re not allowed to sell your vote” is what one might say. And there is a good reason for this rule - if buying and selling of votes were to be allowed, it would result in Political parties and specific interest groups essentially buying up votes and seats. And why is that bad? In one way it is bad because it will result in too much of overlapping of the political system with the economic system, but at its core it is bad because it will result in decrease in diversity of political opinion and expression via voting - a less diverse system will have no way of bringing all perspectives into the system in order to allow it to find the right direction to progress in.
The diversity of our opinions/perspectives is an important asset of our political system. Without it our society, nation will not be able to make the best choices over time to head in the right direction. In other words our system will not be as politically free as might expect. Thus, we protect this asset by exercising a rule such as “not allowed to sell your vote”.
Now the question I want to get to is - do we equally protect all of our most important freedoms in a similar way? That is what I want to examine in this post.
Two tenets of freedom
For those of us who live in the west, we always thrive for a free society. From our celebration of independence to celebration of many Hollywood movies we express the significance of freedom all the time. Freedom in a western-style society can be boiled down to two tenets - political freedom and economic freedom. These two foundational freedoms may be expressed via at least one mode of expression - choice (as represented by freedom of choice).
Political Freedom
In case of political freedom, the “freedom of choice” refers to the freedom to choose a candidate or political party to provide leadership for a duration of time - ie ability to vote in an election. We enforce this foundational tenet of freedom by the means of our democratic principles. “Every vote counts” is a mechanism to ensure the maximal exercise of our political freedom. At every election we are provided a list of political candidates (representing political parties) and we have to decide whom do we want to vote for. If you do not believe in the system or in the choices in front of you the max you can do is not vote. The system is not allowed to be corrupted by transference of your right to vote to another person. That is how important our right to vote is - how important our individual political decision-making is. That is how important the diversity of our political opinion is, our political freedom is.
Economic Freedom
What about our economic freedom? There has to be a similar form of expression of that freedom as well. And there is one form of expression that does exist - that is based on what we buy and sell in the market, i.e. the real world. So far, I am not referring to the financial markets, but the world market of products and services - our buy and sell decisions in this market is akin to voting in our political system. When we buy product A as opposed to its competition (product B) we are essentially voting for product A. Repeated many times over across the population and over a time-period this voting system decides which product survives and which does not. Electorate-share translates to market-share in this case. This winning and loosing of market-share of products and services eventually roll up to the companies that produce/provide them. In summation, the saying goes “we vote with our wallets”.
But what about equity? The market we talked about above is only one of the markets in the economic system. Another one is equity markets. Shares of the companies that produce these products and services are also available for buying and selling - they are also competing for an “equity” market share. How do we exercise our freedom of choice in this market? How do we deliver diversity of opinion to this market? By means of our decisions on buy and sell transactions on these equities. When we decide to buy shares in a company we are essentially voting for that company in the equity market. In many ways this is directly comparable to voting in our political system. Our freedom of choice, our diversity of opinion and our participation - just as in the political system these are very critical in our economic system as well. Thus one might argue that we need to protect and exercise these rights and attributes of our economic system.
All this boils down to - the more of us are in the system, the better. The more of us vote our perspectives in the system the better. The more of us bring in our independent opinions to the markets the better. And that is what retail investors bring in - a diversity of opinions and perspectives. If the political system can benefit from that, why not the economic system. If “every vote” counts, why not every “buy and sell” should also count? If “every voter” counts, why not “every investor and trader” also count? This perspective supports the rise of the retail investor and the platforms that support them - the Robinhood, WealthSimple, Questrade, Interactive Brokers, Zerodha of the world. Irrespective of whether the retail investor manages to survive this time around, there is an important role they play in the economic system. We should never discount that.
Finally, I would like to wrap up with these questions - how much are you willing to pay to somebody else to have them decide and vote… in the economic system? How much are you willing to pay to somebody else to make decisions on your behalf to buy and sell shares?
NOTE: The post above looked at the political and the economic system via democratic attributes. There is also republican attributes in both our political and economic systems that are very important of their own reasons. I will examine that in a separate post.