Sweet spot

In the gambling world there is a long odds phenomenon where a emotional bias to betting on long odds reduces the return on investment. See the plot below.

Government intervention into the business environment in a democracy suffers a similar fate. Long odds are guaranteed by a non-financial aversion to risk, driven by the fear of negative publicity, in turn driven by claims of favoritism or negligence.

The result? Government initiatives driven by process and not outcomes.

It’s a chronic problem in the west highlighted by the success of certain government interventions in some countries with less representative electorate systems.

Of course, there is a inflexion point where less public review just results in corruption and rubbish returns for the tax payers.

What I am trying to say is that there is a sort of sweet spot in democratic systems where a certain degree of public feedback is entertained and ensures the best returns on government investment.

We are way past this sweet spot here in Australia, which is ironic given that, almost to a man or woman, we look to government to fix every problem