Another Take On “The Bezzle”

John Kenneth Galbraith proposed the idea of “the Bezzle” in his landmark book, “The Great Crash’. In Galbraith’s idea the bezzle is an amount when one person or group has a benefit while another group thinks they have a benefit but in fact they have already lost the value. For a time, intelectually both own the value. The bezzle exists as long as the loser doesn’t know they have lost.

In Business.

Suppose I take a deposit on some contract you think I will perform. Until you come realize, it will never be done, you have the anticipated vlaue fo the completed contract, you benefit, and I have the money. We both have value for a while.

In politics.

A politician promises something of value and I vote for them. For a while we both have value, but when the promise remains unfulfilled or I feel that my vote was embezzled. The bezzle arises not from a criminal act but from emotional manipulation.

The bezzle leads to cynicism.

Daniel Kahnemand and Amos Tversky posited that people are more offended by loss than they are elated by a win of the same size. We can sense that wehn we lose or win on a stock holding. But when we lose to a poltical bezzle, we cannot learn much other than mistrust. As a reply to a grandchild’s question, “Do all fairy tales begin with once upon a time”. Grandpa replied, “No, some begin with if I am elected I promise..”

Why do we believe in what is presented.

We naturally trust people who have good intentions. We must learn to look a little further. Can good intentions be implemented at a cost that is less than the benenfit obtained? If not what we would we want them? They consume vlaues that could be more properly allocated elsewhere.

Good intentions are not enough. Milton Friedman offered this thought, “Concentrated power is not rendered harmless by the good intentions of those who create it.” We err when we give power on the basis of some promised good intention. The bezzle.

Where to next

Government must come to realize that the people want effectiveness. Not perfection, just reasonable performance. Voters want governments to be in the real world.

In our bezzle world, we will lose by what is tied up in the political bezzle and in the business bezzle.  When reality comes forward, there will be a loss. A very large loss. Polticians have a vested interest in not only maintaining the bezzle, but also expanding it.

Science fiction writer, Philip K. Dick makes an interesting point about reality. “Reality is that which, when you stop believing in it, still exists. The bezzle will sooner or later disappear and there will be a real loss.

How shoouldwe act now?


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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