Uncle Maxwell’s System

Who says that people in America don’t like to deal with theory? If that were true, the media would stop filling the airwaves and newspaper columns with an endless procession of pundits, each spewing a system for explaining and predicting the machinations of free markets — theories like “business cycles”, “leading and lagging indicators”, market “corrections”, “long haul investing”, “market reactions”, “animal spirits”, and “trickle down” economics.

The only theory you never hear on TV is the one that says “the game is rigged”.

Which reminds me…

When I was a kid growing up in LA, my extended family, all transplants from the East Coat, used to gather for weekend brunch. My recollection of those gatherings can be best described as scenes from a Woody Allen movie. Uncle Max stands out in my memory because he was obsessed and always talking about his “system” for handicapping the ponies. He loved betting on horse races, both on and off the track. He always had a racing sheet, notebook, and pencil  at the ready. The least hint of interest from another person would set him to explaining his “system” for choosing horses and betting. Within a few minutes, he would fill a few pages in his notebook with esoteric mathematical calculations and rapid fire talk, which he always concluded by saying, “I’m close—very close to a foolproof system that will make us all rich.”

Although I couldn’t understand the details of his system, I soon concluded that my uncle Max was certainly a genius on par with Albert Einstein. It wasn’t until many years later that I came to understand that every week, uncle Max gambled away all of his hard earned money to those whole really did have the system for making money on the ponies —- the track owners and the bookies.

Today, when I watch the economic pundits wagging their tongues on television, I am reminded of uncle Max and his “system”. Everybody loves a good theory but who is it that has the system that actually pays off? It wasn’t uncle Max.