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Average is Bad

Wed, 25 Apr 2012 20:57:05 GMT

A nice thing about market economies is they are generally run by experts, not consensus. This aristocracy is often derided as plutocratic, but as your average person is incredibly ignorant, I think as long as there's competition, plutocrats are much better than any plebiscite. Consider where 35% did worse than guessing on this Pew Research Center test of political knowledge. Questions were all about our two political parties, such as "which party is generally more supportive of restricting access to abortion?" They are all that easy.

 This is why the indices are such biased reflections of average performance, your average investor is quite ignorant. They know more than experts on their daily affairs, but on generalizations and higher-level insights not in their bailiwick, they fail miserably.  I know literacy tests were disingenuously used to discriminate in the past, but I fundamentally the idea was sound, as currently it is just like letting fans vote on who gets in the football Hall of Fame.   Consider this Louisiana literacy test.

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