This Should Not Be Surprising

At first the news that hedge-fund managers have been contributing more the Democrats than Republicans comes as a surprise:

Democrats have so far gotten the lion's share of hedge-fund managers’ campaign contributions in the 2008 presidential money race — 75 percent, according to a Center for Responsive Politics/Absolute Return magazine analysis of the candidates' first-quarter financials.

I don't think this should be a surprise. These people make their money by either knowing better than the market (at least one millionth of the market) or by appearing to know better than the market. They might believe in extending that to more than just the small part they are familiar with and figure the economy will do much better when it's managed.

I doubt if the following explanation holds water:

Hedge-fund managers tend to live near the top of cosmopolitan, culturally liberal societies. They tend to find Republican positions on embryo-destroying stem-cell research and gay marriage to be nothing short of primitive.

After all, the rest of the investment industry is equally well-educated and urbanized. If anything, their belief that they know better than the market could be the cause of their belief that they know better than religious traditions.

By the way, do they know better than the market? There are reasons to be skeptical. As I've mentioned before, violations of the Efficient-Market Hypothesis tend to be temporary and may be no more reliable than the data-mining results that appeared to indicate astrological signs could be medically relevant. The fact that the hedge-fund people tend to be Democrats might be no more relevant than the political opinions of lottery winners.

We might have to brace ourselves for a scandal. If potential investors suddenly realize the hedge funds are simply a type of gambling, they will look around for people to blame. Since everybody knows “the rich” are on the right side of the political spectrum, they will blame the activities of these Democrats on free market capitalism. Could this be the next Enron?