Politics, Panic and Poker

The Conservatives have offered the LibDems a referendum on electoral reform (albeit only on a very weak version of reform). Clearly a panic move, they didn’t even wait to get a sense of people’s reactions to Brown’s earlier speech.

I’ve long said that bankers ought to be forced to play poker in order to understand their own relationship with risk and return. I now think that politicians ought to play so that they can appreciate the strength of their hands and, crucially, learn to walk away from a hand to play another day. The Tories have something to learn.

In classical Modern Portfolio Theory we also learn to weigh up risk and expected return. Similar principles apply in politics. Nick Clegg has to decide between low risk with the Conservatives, with a resulting majority of seats, and high risk with Labour, for who would trust them. But how high will the expected returns be? The Conservatives have offered more than they should have. I can only assume that Clegg has photos of Cameron in a compromising position.

And does anyone know why this haggling is happening in public instead of behind closed doors?

If this is the quality of horse trading we can expect from the current crop of British politicians then Lord help us when we have to haggle with the wider world.