American politics appears to be broken. Polarisation, excessive reliance on the judiciary to make laws, and gridlock in Washington, resulting in episodic fiscal cliffs, suggest a malaise. I've just read a piece in the American Interest by the ever-insightful Francis Fukuyama on what is wrong with American political institutions. He delves into the historical development of American politics and finds that the current problems are deep-seated. He highlights two particular problems - (a) the rise of lobbyists and special interest groups and (b) the usurpation by the judiciary of law making. Fukuyama is pessimistic about the future of American politics. According to him, the last time the US found itself with such a malaise, it took the Civil War to change the political trajectory of the country.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.