Sometimes fools are just foolish.
We talked yesterday about the wisdom of fools—that in many of Shakespeare’s plays, the fool speaks the truth—sometimes unwittingly—while the lead characters dissemble and dissimulate. While the main characters deceive one another and themselves, the central conflict of the play grinds forward, and the truths spoken by the fool ends up being more astute than anyone expects.
But sometimes fools are just that. A case in point is Nick Bottom in A Midsummer Night’s Dream. Bottom is a prominent member of a group of craftsmen who will perform a play before the king of Athens. As each part is assigned, he declares, “Let me be that one!” The leading man, the leading woman, a lion—it doesn’t matter, he thinks he should play them all.
Later on, during a rehearsal, Bottom’s head is famously transformed into that of an ass. A fairy queen awakens nearby, and—because of a potion—immediately falls in love with him, to great comic effect. Shakespeare’s main point is that love makes fools of us all. And Bottom’s foolishness is obvious. But there’s a minor point: in life, it can’t all be about you. There has to be a measure of give and take—of cooperation and coordination.
This mirrors a truth about trade made by Adam Smith: free exchange doesn’t happen unless both parties believe they will benefit. In general, the more trade, the more benefit. In the same way, companies need to offer something that truly adds value for their customers. Competition makes sure this happens, because consumers are free to go somewhere else. The problem with monopolies is that consumers don’t have a choice. Monopolists don’t about their customers; they don’t have to.
In economics, as in life, it’s not all about you. It’s about what you can give. Otherwise life—and the market—just makes us look silly.
Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!