How Real is Market Efficiency?

Fama, Shiller and Hansen

The 2013 Nobel Prize in economics was awarded to three US economists who have made great contributions to the asset price theory and mechanism, namely in understanding what lies behind price movements. The three Nobel Prize laureates were: Robert Shiller from Yale, and Eugene Fama and Hans Peter Larsen from the University of Chicago.

There is no question about the crucial importance of gaining valuable insights on this topic. Interestingly enough, the points of view and major conclusions from the work of these distinguished scholars are not only different; from certain angles their findings can even seem contradictory.

Dr. Fama’s major work has been about the market efficiency. In general terms, Eugene Fama’s fundamental conclusion is that, on the average, markets tend to behave rationally, since all participants essentially have the same access to the same information in real time; as a result, the rationale goes, it is impossible to outperform the market, on a consistent basis in the long run.

From a different angle, Robert Shiller has concluded that, quite to the contrary, markets are prone to form price bubbles and behave with irrational exuberance, like the in the US subprime bubble. Moreover, Dr. Shiller had been warning since 2005 about the evident house prices bubble, and about its potential to drag prices down by 40%, which not long after proved to be the case. Likewise, Robert Shiller had earlier also timely warned about the internet bubble that culminated in the first quarter of 2000.

“There were a couple of guys in that exchange who couldn’t tell a hide from copper sheeting but they made a lot of money. Why? They weren’t trading a commodity but human nature … and there is something about human nature which is not rational.”

——Alan Greenspan

Lars Peter Hansen developed a method of statistical analysis to evaluate theories about price movements that is now widely used by other social scientists.

The apparent contradictions of Dr. Fama and Dr. Shiller easily fades away when the proper perspective is utilized. The way I see it, being a global investment manager myself with over 30 years of experience, Dr. Fama’s findings are correct most of the time. In fact, it does not even require sophisticated mathematical techniques to prove it; Dr. Fama’s major conclusion is axiomatic, a truism: the market (most market participants) cannot beat itself; that is a practical impossibility —otherwise, there would be no market. From that standpoint, Dr. Fama’s major conclusions are right on target.

Economic theory

The inevitable formations of price market bubbles in a recurrent way, however irregular, is and has been a fact of life throughout mankind’s existence, with no exceptions. Dr. Shiller’s work provides the uncontroversial statistical and mathematical proof thereof. More on this subject in our article Are Bubbles A Product of Economic Cycles?.

By combining both approaches more comprehensive responses can be accomplished. Yes, there is a small perentage of investment strategists that have been able to consistently outperform the major indices throughout time by finding market inefficiencies —in other words market outliers that outperform the market during several years. In fact, market bubbles happen all the time, particularly at the micro level of specific investments, more often than in asset classes. There are literally thousands of unmistakable examples. Let’s elaborate on one of them.

The stock price of Priceline.com [PCLN], now the largest digital travel agency on Earth, once its business model was solidly proven by around 2006, it began to experience an exponential price appreciation that took it from $25 in the summer of 2006 to $144 in May 2008. Once the subprime crisis was manifest, Priceline.com’s stock took a beating along with the market itself, going all the way down to $45.10, in October of the same year. PCLN had experienced an almost sixfold price increase in slightly less than two years, from 2006 to 2008, before going through a temporary price collapse of almost 70% during only five months. Yes, that was in the midst of the subprime parafernalia; and yes, I meant temporary price collapse, because that is what it was. From then on, PCLN’s stock went all the way up to $273.90 in April 2010, an over a sixfold price increase in only 18 months! Only to experience another temporary setback of around 15% during a few weeks –less than 13– before climbing back up to $556.20 in April 2011, an over threefold additional price increase in only 10 months! The current market price is in the neighborhood of $1,074, for a 57% average annual rate of price growth from the summer of 2006 to october 2013.

Was PCLN’s 17 fold price expansion from $45.10 (market low) in October 2008  to $774.90 (market high) in April 2012 a bubble like phenomena? Let’s not get lost in semantics. The truth is that PCLN has developed an ultra reliable business model that virtually exploded during the time frame analyzed. In addition, an appreciation of the multiples at which the stock now trades versus that which was initially commanded has also helped. The major driver behind such a spectacular price rise was an explosive rate of growth in sales and particularly in earnings. There isn’t then that much mystery behind such exponential price appreciations —or market outliers. There are hundreds of examples every year, most of them related to startup companies, and/or new disruptive business models.

Like in most human professional endeavors, there is a lot of hype in the investment world, indeed plenty of it. That seems to be a major reason, a logical one, behind so much reticence to acknowledge that there is a very talented minority of investment managers that is able to consistently outperform the major market indices in the long run. The most conspicuous of those ultra-talented investment strategists is Warren Buffett, the legendary investor. The most remarkable aspect of Buffett’s success is that he has been able to essentially maintain extraordinary average long-term annual growth rates —above 15%, depending on the time frame selected— despite the colossal current size of his holdings —US $458 billion.

Thus, outstanding investment strategists like Warren Buffett have truly been able to consistently outperform the major market indices in the long-run by smartly exploiting market inefficiencies. They are a true minority. They are real, they do exist, and always will.

Still In Politics 1.0 after 237 Years? (Part Two)


we the people 1

The roots of violence: wealth without work, pleasure without conscience, 

knowledge without character, commerce without morality,

science without humanity,worship without sacrifice, politics without principles.

 —— Gandhi

During the birth of the US in 1776, its founding fathers had the vision, courage, and wisdom to embark the then nascent country on the highest ideals of the European Enlightenment, inspired by the leading British and French thinkers. The major ideals sought after were namely: unprecedented freedom, equality, and full compliance with the law—all within a full adherence to a high spirit of humanism and respect for individualism.

The founding fathers embraced the Enlightenment ideals wholeheartedly, with enthusiasm and conviction. That was a very bold development, particularly because:

  • No nation had ever before dared to go in that direction, and much less dared to found an entirely new country on these ideals.

  • The new nation was already relatively large. Bold experimentation makes more sense in small universes.

  • The experiment was implemented without a prior pilot test—this was the pilot test—and consequently, it was an extreme all-or-nothing ordeal.

The seeds planted in 1776 eventually yielded spectacular results.

During the XIX century, by the time of the industrial revolution, many of the most pressing political issues of the new nation had been favorably dealt with. In addition, the huge wave of immigrants plus the highly hospitable investing environment injected great dynamism to the economy, catapulting the US into a self-sustainable accelerated economic rate of growth that led it to become the largest economy and the most powerful nation on the planet by the beginning of the XX century.

The melting pot experiment was also a revolutionary way of approaching that otherwise complex and satanized issue. No nation before dared to be so hospitable to newcomers, who arrived in droves, from all over the world, especially from Europe; that was also an astounding first.

Despite the not few difficulties and challenges that massive immigration wave created, the US was able to integrate the immigrant population with reasonable expediency, with fantastic results for both sides, the newcomers and the nation as a whole.

As an inevitable result of the successful US experiment, coupled with its increasing influence in international affairs—as it grew stronger by the day—most of the other political systems in the world were pressured to evolve and to adapt, using the US experience as a role model. The US became a worldwide beacon for freedom and prosperity.

The internal pressure—from their societies—to adjust and emulate as much as possible the successful US Model was particularly more noticeable in Europe.  The European monarchies, albeit not exclusively, were forced to adjust to the new reality, eventually ending up as symbolic monarchies, with extremely limited political power—almost nil—mainly circumscribed to protocolary duties. The empire of Japan took longer to adjust, until the end of WWII.

As far as political systems go, there have not

been any significant breakthroughs since 1776.

If a careful and objective analysis is made, it is very easy and simple to conclude that, as far as political systems go, there have not been any significant breakthroughs since 1776, the year the US was founded. Granted, the then new political system made tremendous inroads, adding a very high socioeconomic value. The whole world benefited from it, to different degrees.

However successful that bold political experiment turned out to be, and indeed it was extremely successful—beyond the best scenarios anticipated by the most optimists, it eventually ran into decay, as every human endeavor does when not properly adjusted in search of continuous improvement, as talked about in Part One of this series.

The major contributions were rapidly assimilated during the first decades, and probably until a century later, but nothing more happened. To the contrary, some grotesque unintended consequences arose and took root.

Legislatures, through their political parties, took life of their own, like in a separate reality. Politicians soon realized that the new system could actually insulate them from the crowd, from society, from the mere force that put them in office, in the first place.

Since both transparency and more so the accountability system are so loose and ineffective in contemporary political systems, for practical purposes legislators have been able to mostly live on a separate reality, fairly apart from the real world. Being voted out from office turns out to be a not-so-terrible penalization after all. Contemporary political systems are not an all-or-nothing system. Not at all. In a bipartisan political system like the US’, losers still keep a great deal of power, influence, and privileges. Thus, legislators have learned to strive—according to their standards, namely keeping power— even when losing.

On the other hand, continuous improvement is a must in any endeavor, more so when dealing with the overall political system, unquestionably the most fundamental pillar of any society.

It really is very crucial to analyze, and to understand why in that hyper important field of endeavor the continuous improvement best practice has been conspicuously absent throughout the years. Let’s face it. The answer is not that difficult to come by. The political systems of most nations have become an island, with extremely loose and ill defined accountability standards. So far they have not been sufficiently compelled to change.

For practical purposes, the only major interactive pressure mechanism that citizens have at hand is voting poor performing politicians and/or political parties out of office. Unfortunately, that penalization is not enough most of the time, because it falls very short of being a reasonably effective management tool. There are several very significant limitations of being voted out from office as a penalization mechanism:

  • To start with, there is a substantial time lag between the actual performance and the corresponding response through the ensuing voting mechanism.

  • Worst of all, and very sadly, most of the time it actually really does not make much difference which party—or person—is in office. Most of the time, the difference is rather marginal, because the margin of maneuver is very limited for any elected officer, political party or combination thereof.

  • Because contemporary political systems are not an all-or-nothing proposition, as previously stated,  the penalization of being out of office is highly insufficient and thus ineffective.

In other words, the poor state of affairs is a systemic problem.

Systemic problems require structural changes, profound transformations. 

Nothing else will do.

we the people 2

The great challenge for contemporary societies resides in the fact that the only way to modify the system is through the legislature itself. That is to say, at the bottom of all this lies a monumental conflict of interest issue. Societies have been abducted by their own legislative powers; that has been a terrifying unintended consequence of the current political structure.

That political structure, as we know it, has to be profoundly modified, to close the huge disconnect between society and the legislatures. In Part One, we mentioned how to go about it.

The politicians and their parties have been in a comfort zone for too long—decades if not over a century, and counting—. Legally, according to contemporary political practices, politicians “comply” with their obligation to represent society at large. Unfortunately, they do so in an extremely deficient and loose way. As long as the law and corresponding regulations are not modified, the status quo will essentially perpetuate itself, like it has done so for the past decades. That is utterly unacceptable.

Management science has evolved in a dramatic way since late in the XIX century. There is a great deal of command from many valuable subjects that have to do with human behavior, effectiveness in reaching goals, and correcting severe deviations, among others.

Government has to be managed according to the highest known standards.

Citizens should not settle for less.

The cost/benefit relationship of achieving an appropriate structural reform of contemporary political systems is disproportionately generous. The benefit to be reaped from it substantially outweighs any associated costs. As stated in Part One of this series, in the US alone, the benefit of an adequate political system restructuring is in the hundreds of millions of dollars a year, from a very conservative perspective. There is no bigger social impact initiative on the planet than constructively upgrading contemporary political systems.

As we have repeatedly stated before in this space, all human designs and organizations are works in progress, unfinished business. Political systems are not the exception.

Go to Part Three of this series.

 

 

Still in Politics 1.0 After 237 Years? (Part One)

“Live as if you were to die tomorrow.

Learn as if you may live forever.” 

——Gandhi

The US Debt Limit and Budget Debacle. 

Is the Most Powerful Nation on Earth a Role Model Country?

 

Most US citizens, as well as the world at large, repudiated the ignominious behavior of the US Congress in the recent drama that culminated –only for the time being– in a temporary truce between Democrats and Republicans.

There is a lot of anger and frustration generated by this fiasco, and rightly so.

Given the momentous nature of the debate, an adequate diagnosis on what happened, what is going on, and what to do about it is crucial.

Who is to blame for the debacle?

At a first glance, an appropriate answer to the previous question seems very difficult to come by. Fortunately, there is an unmistakable answer. Beyond the deplorable behavior of many Congressmen starring in that soap opera—from both sides of the aisle—, deep underneath lies an unequivocal truth: extremely poor governance in rules and practices. US Congressmen are only trying to maximize the primitive rules of the game as they know it. Quite frequently, the current rules of the game not only do not lend themselves for higher purposes; more often than not, they lend themselves beautifully for filibusters and all sorts of dirty tricks. Hence the recurrent poor results in Congress’ performance.

Evolution of politics

Not to serve as consolation, there are even worse cases elsewhere in the world, along similar lines of deplorable public governance practices: Silvio Berlusconi in Italy essentially abducted that beautiful country’s politics for almost three decades; fortunately, at last, his influence seems to be waning, a phenomena that probably has more to do with his old age —77— than anything else. More on this subject in our articles: Venezuela & Italy. A Tale of Two Horrors and Italy’s Perennially Troubled Political Status.

The great majority of the contemporary political systems are, in essence, a copy-paste version of the US’, after the superlative success of being the first major nation on Earth that implemented most of the best ideas of the Enlightenment, since its foundation. There is no doubt about the huge leap forward that the US’ political system represented at that time, 237 years ago, not only for itself but for the world at large, by so successfully replacing the worn-out monarchic systems of that age. More on this in Part Two of this series.

However momentous the founding of the US turned out to be, the ensuing political system has not experimented any major improvement ever since. And, no wonder then, the dire state of affairs of the contemporary political structure worldwide.

Virtually without exception, most political systems of the developed world, along with most emerging nations have degenerated into being abducted by their own legislatures which, in turn, have a much less effective power and margin of maneuver than typically is perceived.

Political parties seem to be the ones that, in the end, have most of the control. Alas, in analyzing more carefully the real power of political parties, it turns out that their effectiveness ends up significantly diminished by several factors, among others:

  • Internal divisions. More often than not, those divisions are of a seismic nature, like the great divide and antagonism between the Tea Party and the conservative wing of the Republican Party in the US.As a result, all political parties are excessively fragmented, miles away from behaving in a monolithic manner, with a high degree of unity and cohesiveness.

  • The fear of penalization by behaving significantly different than the rest substantially outweighs the genuine desire of a passionate and responsible minority that really would like to make profound changes for the better.

The result of all that is abundant bickering and dithering, and a deep aversion to the implementation of structural changes. It is no wonder then why the go-to “solution” for almost everything is an ad nauseum kicking-the-can.

Outdated and dysfunctional rules,

regulations, procedures and practices

=

Dysfunctional results

What can be done to revert this horrific state of affairs?

Actually, the genuine solution is simpler than it may seem, at least from the conceptual framework: let’s improve the rules of the game in such a way that the major interests of the legislatures is as closely aligned as possible with the major interests and needs of societies at large. Incentives have to be redefined, aiming for the closest possible alignment of interest between society, political parties, and politicians —at the personal level. That is crucial. You can find an in depth analysis on this subject in my book Globalization: Opportunities & Implications—now in its just released second edition.

In no way do I pretend to minimize the daunting task this authentic solution implies. Most fortunately, however, the benefits of doing it well far outweigh any associated costs. How can I be so sure of this? Very simple: the most visible costs of the highly dysfunctional contemporary political systems are tepid economic growth, way below its true potential. Another side of the same coin is the stubbornly and painfully high unemployment levels. In short, the opportunity cost of the miserable current state of affairs is humongous, several hundreds of billions of dollars a year in lost output in the US alone. Severe mismanagement of public affairs is that expensive!

Even in the deplorable current state of affairs there already are some built-in mechanisms that exert both external and internal pressure in the right direction. For instance, the Chinese government was very vocal and clear about its discontent concerning the debt limit and budget US fiasco, and for good reason, the Chinese government is the largest US Treasuries holder on Earth. Unfortunately, albeit in the right direction, that pressure is rather imperfect and insufficiently effective for the chief purposes sought after. It is only an external pressure.

Fortunately, there are other forces in movement exerting considerable internal pressure on the US’ political system, and that is society. A recent example of this is Howard Schultz’s petition. The Starbucks Chairman and CEO mobilized his customer base across the US and gathered 1.7 million signatures on a petition sent to Washington, pushing the government to solve its budget woes. This is a beautiful example of how two basic components of society are working together: companies and individuals alike. We applaud this kind of action which is urgently needed around the world.

 

CONCLUSIONS

The best practice of continuous improvement has been conspicuously absent in the US’ (and the world’s) political system, creating a sclerotic and dysfunctional reality.

  • It is an undebatable truth that contemporary political systems are highly dysfunctional. The great contributions that the current system provided to the world, probably for over a century, are worn-out, and are in urgent need of a profound overhaul. A genuinely upgraded version, a true re-engineering of the political system is imperative.

  • The abduction of societies by their respective congresses and parliaments has to end.

  • There is a terrifying disconnect between societies and their respective congresses and parliaments. The representation system, as we know it, has repeatedly proven to have very profound flaws and limitations. It is time to change it, to substantially upgrade it.

  • Both, Management Science and Game Theory disciplines are up to the challenge. Political Science has not sufficiently benefited from the many tools, procedures and methods of the former.

  • The greatest obstacle resides in the fact that the main responsible bodies for correcting the multiple flaws and deficiencies are also the ones that will experience the greater burden of change. In other words, legislatures have to substantially self-regulate themselves, overcoming a myriad of internal conflicts of interest. What is required is a consistent and relentless pressure from society, and a truly virtuous attitude from legislators themselves.

The truly virtuous attitude from legislators is only mentioned as a hypothetical reference. History has unmistakably shown that, most of the time, great virtuous social changes are only possible through extremely well-structured systematic efforts and pressures, from civil society at large.

The timing and need to substantially improve public governance in Western society could not be riper. Despite many recent setbacks, the US is still, by and large, the most powerful and influential country in the world.

The US should lead by example; there is no better pragmatic alternative. There are only two governments with sufficient critical mass, and credibility to lead in this most far-reaching project: the US and the EU; the EU, however, is far from being a suitable candidate given that it is still an immature confederacy, years away from being a cohesive enough society to successfully handle global challenges of this caliber.

The US debt limit and budget debacle would be a terrible crisis and circumstance to waste. There is so much the US, and the world can learn from it!

Humankind has to be quicker and more flexible to learn from real life. Challenges and obstacles have to be overcome. Both, an appropriate diagnostic and decisive corrective answer is the only sensible way for progress. We have to learn as we live. Complacency and laissez faire will never be a reasonable alternative in circumstances such as these. If insufficiently attended, the dynamics of this sort of sociopolitical challenges push it towards the worst, until a swift remedy is implemented.

We have to be able to continuously learn from reality. Otherwise, we are doomed to fail, as has been the case up to now as far as contemporary political systems go. Everyday challenges are obstacles to learn from and to be overcome.

Civil society has to forcefully step in: major think-tanks, leading universities, big corporations, professional associations, large financial contributors to the political parties, and so on. More on this in Wanted: Global Society Strategists.

There is a lot at stake. Politics are too important to be left in the hands of politicians alone.

 

 

Healthcare Reform in the US: The Humongous Opportunity to Improve Governance in the Developed World

healthcare

According to recent statistics, the total cost of the US healthcare system –taking into account public and private service providers– is in the neighborhood of USD $2.8 trillion a year, about 18% of its GDP.

By comparing on a per capita basis, the total cost of healthcare in the US is around:

  • 50% higher than France’s

  • 80% higher than Canada’s

  • 90% higher than Netherlands’

  • 100% higher than Germany’s, Britain’s, Norway’s, Sweden’s and Australia’s

  • 170% higher than Italy’s

  • 180% higher than Japan’s

  • 190% higher than New Zealand’s

 

Among other elements, life expectancy in the US is at the bottom of the average of the eleven nations previously mentioned. Generally speaking, the quality of healthcare in the US isn’t particularly different from any of the eleven nations mentioned yet, in a very dramatic contrast, the cost of healthcare in the US is remarkably higher than the rest of the developed world.

 How did the US get into such a big mess? There are plenty of reasons. A huge truth, however, lies at the bottom of such a horrific state of affairs: a deficiently designedsystem, with extremely poor public governance (more on this in my book GLOBALIZATION: Opportunities & Implications). When a system has reasonably effective checks and balances functioning, by definition it is harder for it to get out of hand. The US healthcare system evidently is highly ineffective and has insufficient (frequently non-existent) checks and balances.

The diagnostic of the combination of causes behind the massive dyssaray in the US healthcare system is widely known, mainly: structural deficiencies in the way insurance companies and drug companies operate, government bureaucracy and its inability to negotiate prices, malpractice and malpractice suits, among others.

A piecemeal approach to correct the US healthcare system is indispensable, yet insufficient by itself. The only way to grapple with it in a meaningful way is through a simultaneous dual approach:

health-care-reform

  1. A holistic, comprehensive focus on the whole healthcare system. Genuinely assigning top priority to make it competitive, according to the world best practices and benchmarks. Understandably, this initiative has to be favorably voted by the US Congress.

  1. In addition to 1), as previously mentioned, a series of very specific fixes in all areas that require it. Point 2), however, must be done in strict accordance, as indispensable specific tasks within the overall 1) framework. In other words, the master plan is contained in 1). The specific tasks of 2) must be subordinated to 1).

If point 1) is overlooked and/or insufficiently addressed to, as has been the case for several decades to date, more failures or, at best only symbolic progress will be attained. Great deviations require great measures.

Learning from other countries, from the best run systems in the world is compulsory. This is one of the finest advantages a global society truly offers. There are plenty of countries to learn from. Benchmarking with the rest of the world is imperative, particularly with the developed world, in the US’s case. Naturally, any decent benchmarking effort is dynamic, with permanent action implemented in an ongoing basis, to close the gap with the best managed countries.

The deplorable situation of the US healthcare system is not a new phenomenon. In fact, this unbearable status quo has been, on the average, increasingly deteriorating in recent decades. Given its crucial role in the US economy as a whole, it cannot continue in the present course for many more years. A profound and systematic remedy must be shortly implemented; otherwise, it will become unsustainable in the not so distant future.

If history is any guide, the turning point of the US healthcare system inevitably will come when the crisis hits superlative proportions, if previous deep and effective corrective action has not been taken.

The incurred costs for the US society to date of maintaining such a dysfunctional healthcare system already have been several tens of trillions dollars of wasted resources. There is no room for such a monumental mismanagement in any country on earth, not even in the wealthiest economy on the planet.

There is no debate about the humongous problem the US healthcare system represents. Most fortunately, however, the magnitude of the opportunity behind such dismal state of affairs is, at the very least, of the same caliber than the horrendous multi-mentioned cost of essentially maintaining the status quo.

The US healthcare system is a prime example of mismanagement and unresponsive leadership, a true case of very poor governance. Interestingly enough, the US did not get to be the wealthiest and the largest economy on earth by being a notable or frequent practitioner of poor governance, more so in such a monumental scale. To the contrary.

Our reading of this situation is that, in essence, contemporary political systems are experiencing severe fatigue; they are worn out. The US healthcare system is a textbook example of this.

The US healthcare system is thus a very illustrative grotesque example of the acute dysfunctionality of contemporary political systems in developed nations (see related post). The EU debt crisis and its impossibility to meaningfully advance in the direction of a true confederation of European states is another prime example. In fact, to a lesser or greater degree, this dysfunctionality afflicts virtually all developed nations. This otherwise terrifying conclusion should not be taken with discouragement. To the contrary. Therein lies one of the greatest well-being and wealth creation opportunities in the developed world. The US, as a leading nation, has the opportunity to take the leadership in this paramount task.

Effective, well-thought governance for every organization on earth is imperative. Excellent governance of state companies, systems or any other sort of governmental organization is more so, because in most cases the social and economic impact is significantly higher than in the private instances. In addition, high inefficiency in the private sector is most of the time heavily penalized (or rewarded, in the opposite situation) by society itself, by readdressing their patronage to more worthwhile service providers, and by the stock market, when dealing with listed companies. In contrast, given their usual monopoly status in the state sector that is not the case.

In short, given the multiple limitations the very nature of public service implies, it is of paramount importance very high-caliber governance, with highly effective checks and balances in place.

The US health care apparatus truly is a systemic problem/opportunity. An effective fix inevitably requires a profound transformation of policies, guidelines, rules, regulations and practices. The perverse incentives currently at work have to be repealed, and replaced by sensible ones. Otherwise, it will not work. Naturally, everybody is aware of the tremendous difficulty such a monumental task implies. This is the major reason why nobody (presidents and Congress) has been able to fix such a huge and pressing problem for the US society.

The recent episode of the partial federal government shutdown due to the lack of agreement between Democrats and Republicans on how to fund it reveals a worrisome self-destructive attitude of politics in the US. An additional testimonial about the severe dysfunctionality of that political system, remarkably similar to the rest of the world.

In the substantial improvement of highly dysfunctional systemic structures lies the greatest well-being and wealth creation potential of mankind. This is the major source of inspiration behind the rationale of our proposal to start to massively reduce world poverty in a systematic way, beginning with the failed nations (see TGP).

Aiming for substantial improvement of highly dysfunctional systemic structures makes all the social and economic sense in the world. Political obstacles have to be removed. Unfortunately, however sensible the route of genuine constructive structural reform truly is, society has not been, sufficiently aware of the astounding opportunity cost (missed opportunities) most worn-out practices represent. It is time to wake up.

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