Andrew Lahde is an…er..interesting guy. The manager of Lahde Capital, his hedge fund, US Residential Real Estate Hedge V Class A, returned at one point nearly 1000% by doing what James Mackintosh referred to as “shorting US subprime mortgage-related structured credits, particularly the ABX indices.”

What that means is that he bet against the sub-prime mortgage industry and won. Big.

And then he bowed out. In September, he closed his fund and returned money to his investors, stating that the risk of a bank collapse, which would be hell for hedge funds, was too high: “While we concede there are additional opportunities in this episode of crisis and uncertainty, we have concluded that those opportunities are far outweighed by the risks attendant in the use of the over-the-counter derivatives market.”

Interesting, yes, but is it er…interesting?

No.

The err…interesting moment came when he delivered a bizarre, audience-inappropriate, Neo-Marxist stoner rant of a goodbye letter to his investors, calling for things like hemp legalization and government meritocracies, discussing the obvious insanity of illegal marijuana in a Bud Light world, and declaring capitalism dead.

He started off by lamenting how he made his money off of college-educated morons and legacy kids, what he considers this nation's aristocracy. He called them the “low hanging fruit,” saying that they were often “truly not worthy of the education they received (or supposedly received),” and that through a nepotistic system they “rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.”

He wished, as many have before, that it was a meritocracy, saying that “Capitalism worked for two hundred years, but times change, and systems become corrupt.”

What he doesn't understand, though, is that capitalism is a meritocracy, and had capitalism been allowed to run its course, all his aristocratic trust fund legacy brats would be falling on their faces right now.

But instead, the system we have is mercantilist, whereby the government tries to promote the interests of business because it thinks it can generate wealth. So, instead of letting the market punish stupid people for bad choices, our government socialized the failure by robbing taxpayers to the tune of an estimated $1 trillion.

Shrewd economic actors like Lahde help the economy by doing what he loathed – picking off the substandard – what he called the “low hanging fruit” – and freeing up that capital for more efficient uses. It's a shame that they don't see their own importance, and instead, like a suddenly famous actor, are blinded by their guilt at having made it while others still struggle.

Not content with just providing meritocratic solutions to our economic system, he said meritocracies all around and set his sights on fixing our government, saying that since “Thomas Jefferson and Adam Smith” we've had a “dearth of worthy philosophers in this country, at least ones focused on improving government,” (clearly forgetting that Adam Smith was Scottish) and said Linux's open-source model was the way to governmental enlightenment:

George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.

The first problem with what he is saying is that the best and brightest aren't driven to governance – they are driven to business, to ideas and innovations. They look for ways to improve our standard of living, whether it is through inventing a lifesaving vaccine, creating the biggest flatscreen, or like him, smoothing out economic transitions and creating capital for future growth and recovery.

They take risks with their own time and money, and rely on performance and persuasion to get ahead through voluntary arrangements.

Government isn't interested in performance and persuasion. It doesn't work through voluntary arrangements – it only works through force. Therefore, those attracted to government are those that seek power, and those that make it in government are those that can lie and manipulate the best. These are not the people we are to trust with power. Like humorist PJ O'Rourke said, giving power to politicians is like “giving whiskey and car keys to teenage boys.”

Government shouldn't serve “the common man,” anyway. It should serve all men equally. It's the same kind of divisive and elitist thinking that drives so many east and west coast liberals think every inch of ground between LA and New York is filled with illiterate rubes, while conservative talk hosts call those same people “the real Americans.”

We're all real Americans.

But if he truly wants to try this open source type of crafting good government, there is a good and successful example for him to study. They created a government once where the whole country was separated into different regions that were independent of each other, but united under a common banner. Each of these regions sent representatives to a council, whose mission it was simply to protect the collective from invasion, and make sure that trade flowed smoothly between the regions.

The beauty of that regional approach was that it was an open source model, whereby each region was free to make their own rules and approach to governance, so that each region could test out different plans and tactics, and the other regions could learn from their successes and failures. By practical application, each region would improve on the other's success, and in the end, all would be more efficient and effective for it.

This system was called Federalism, and it was practiced for almost 100 years in these United States.