I have often argued that divestment campaigns are fundamentally misguided. They're typically motivated by bad political ideologies, usually are ineffectual, and are bad for investors. Now there's yet more proof I'm right:
Large divestment campaigns are undertaken in part to depress share prices of firms that investors see as engaged in harmful activities. We show that, if successful, investors who divest earn lower and riskier returns than those that do not, leading them to control a decreasing share of wealth over time. Divestment therefore has only a temporary price impact. Further, we show that, for standard managerial compensation schemes, divestment campaigns actually provide an incentive for executives to increase, not reduce, the harm that they create. Therefore, divestment is both counter-productive in the short run, and self-defeating in the long run.
Davies, Shaun William and Van Wesep, Edward Dickersin, The Unintended Consequences of Divestment (August 19, 2015). Available at SSRN: http://ssrn.com/abstract=2647729
Just hours after Hillary Clinton unveiled her presidential campaign's push to solve global warming through an aggressive carbon-cutting plan, she sauntered up the steps of a 19-seat private jet in Des Moines, Iowa.
The aircraft, a Dassault model Falcon 900B, burns 347 gallons of fuel per hour.
Back in the Soviet Union certain major streets had a ZIL Lane:
ZiL lanes (also sometimes called "Chaika lanes") are lanes on some principal roads in Moscow dedicated to vehicles carrying senior government officials. Known officially in Russian as rezervniye polosy ("reserved lanes"), they took their nickname from the black limousines produced by ZiL and the luxury Chaika cars that were used by officials of the Soviet Union as their official vehicles. ... The ZiL lanes and restricted routes caused considerable disruption to Moscow's traffic because of the absolute priority given to their users.
Our liberal leadership increasingly is living a ZIL Lane Life. They expect the rest of us to cut our carbon footprint, while they get to keep using private jets, massive motorcades, and a host of other luxuries that are spewing carbon into the air.
I'm reminded of Leona Helmsley's crack that paying taxes is for little people. I suppose our leaders will tell us that saving the planet is for little people.
She has a checkered, to put it charitably (failed, to put it more bluntly), business career and no political career whatsoever, having lost her previous run for elective office. It is the height of chutzpah to imagine that she is remotely qualified to be president. Or, since it’s the more likely endgame, for vice president either.
I would have serious qualms about any candidate who seeks the presidency without government experience, no matter how much value he or she produced for shareholders.
Which raises several questions. When Jesse Jackson ran for POTUS in 1984, 1988, and 2000, he had no government experience to speak of. Will Marcus confirm that he wasn't "remotely qualified to be president"? How about Wes Clark and Al Sharpton when they ran in 2004. If Clark's army experience counts, why not Fiorina's business experience?
Recent statistics released by the U.S. Census Bureau show the following: The two fastest-growing areas of the U.S.? Number one is North Dakota at 9.7%. Number two is the District of Columbia at 8.9%. Consider. North Dakota’s growth consists of entrepreneurial middle-class Americans working in an industry that’s saving other Americans billions in reduced energy costs. The growth in D.C. consists of more bureaucrats conjuring up ideas to capture those billions so they can reinvest it for you. Fellow Americans, would you rather “invest” or spend the energy savings yourself or have the bureaucrats in Washington do it for you?
Seth Mnookin, a journalist who's chronicled the anti-vaccination movement, observed a few years ago that you only had to go visit a Whole Foods to find anti-vaxxers.
Now, it doesn't seem that anyone's actually done the science on that one, but Mnookin's point here is obvious — the anti-vaccination movement is fueled by an over-privileged group of rich people grouped together who swear they won't put any chemicals in their kids (food or vaccines or whatever else), either because it's trendy to be all-natural or they don't understand or accept the science of vaccinations. Their science denying has been propelled further by celebrities, like Jenny McCarthy, Robert F. Kennedy, Jr. and actress Mayim Bialik, who is also a neuroscientist and even plays one on TV.
My guess is that the anti-vaccination crowd leans way left. Among other things, they tend to cluster in far-left areas:
Researchers analyzing records for about 55,000 children born in 13 northern California counties between 2010 and 2012 found five geographic clusters of 3-year-olds with significantly higher rates of vaccine refusal. These included East Bay (10.2 percent refusal rate); Marin and southwest Sonoma counties (6.6 percent refusal); northeastern San Francisco (7.4 percent); northeastern Sacramento County and Roseville (5.5 percent); and south of Sacramento (13.5 percent). By comparison, the vaccine refusal rate outside these clusters is 2.6 percent, according to the study published in the journal Pediatrics. ...
The communities where anti-vaxxers cluster are also among the most liberal. Marin County, San Francsico County and Alameda County all voted overwhelmingly for Obama in 2008. In Marin, 78 percent of the vote went to Obama. In San Francisco, it was 84 percent. And in Alameda, it was 79 percent. That's all higher than what Obama got in his own home county of Cook County, Illinois.
So the next time one of your liberal friends starts in on science denial, point them to this one. Unlike creationism or (at least in the short run) climate change, denying the science on vaccines can be leathal.
One of the most notable consequences of this election was the setback it dealt to public sector unions. Importantly, the losses came at hands of both parties. Republican Scott Walker was reelected in Wisconsin after rolling back the power of public sector unions. Gina Raimondo gained the governorship of Rhode Island despite using her position as that state’s Treasurer to restructure public pensions and thereby earning the enmity of public sector unions. In my own home state of Illinois, Governor Pat Quinn lost in state where the most important mainstay of his party is public sector unions, whose pensions and other exactions have made Illinois the state with one of the lowest credit ratings and worst business climates in the nation.
The decline in political power and legal privileges of public sector unions would be the single most salutary structural improvement in the states where they enjoy such privileges. The right of public sector unions to check off dues, to mandate collective bargaining, and/or to strike gives them unaccountable power in the delivery of public services. As a result such public services are often more expensive and less efficient. Worst of all public sector unions exercise this leverage to gain above-market, unfunded pensions that need to be financed later—at a time when those who have negotiated those pensions have left government.
It is mistake to analogize unions in the public sector to those in the private sector. In the private sector, negotiations over wages are genuinely two sided with management vigorously representing the interests of shareholders. By contrast, in the public sector the real party in interest—the citizens of the city or state—are generally not well represented at the bargaining table. The elected officials cannot be counted on to negotiate effectively because they want the campaign contributions and political muscle that unions can bring.
The recurring dilemma of democratic politics is that politicians often benefit by giving away benefits to such concentrated groups at the expense of the rest of us. Privileges for public sector unions exacerbate this fundamental problem rather than diminish it.
THE assertion that Jews “control” finance is commonplace among anti-Semites. A new academic study* finds that people who live in areas of Germany where persecution of Jews was most intense are less likely to invest in the stockmarket, even today.
The relationship has very strong historical roots. People who live in districts from which Jews were likeliest to be sent to concentration camps under the Nazis are 7.5% less likely to invest in stocks than other Germans; those who live in districts where pogroms occurred during the Black Death (back in the 14th century) are 12% less likely to do so. ...
The effect of this distrust is that German savers in such districts earn lower returns, because they have lower exposure to the stockmarket. “The legacy of Jewish persecution—distrust of finance—has hindered generations of Germans from accumulating financial wealth,” the authors argue. In other words, “Persecution of minorities reduces not only the long-term wealth of the persecuted, but of the persecutors as well.”
The good news, of course, is that haters don't get a free ride. They are paying a cost for indulging their hate.
The bad news, of course, is that haters apparently are willing to pay that cost in very large numbers and over a very long period. This raises serious questions about whether market forces can eradicate discrimination. Hence, even those of us who generally favor limited government should be open to the need for government intervention to prevent intentional discriminaton. (Which is not to say reasonable people cannot differ about the form government intervention ought to take.)
I was reminded of Reagan's famous quip that "The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help'" when I read Daniel Henninger's column in today's WSJ:
Ebola, the Secret Service, Veterans Affairs, ObamaCare’s rollout, the Centers for Disease Control, the World Health Organization, the Federal Emergency Management Agency.
Behind all these names are federal bureaucracies that are supposed to protect people or help them. Instead they have been putting individuals at risk, or worse.
Ebola’s spread in West Africa was predicted. Government agencies responded late. Now it’s here. The Secret Service is so disorganized it can’t protect, of all things, the White House. Veterans died waiting for admission to VA hospitals. The CDC lost track of anthrax, smallpox and H5N1 bird-flu samples. At the State Department, no one seems to quite know why a U.S. ambassador died in Benghazi. The 9/11 Commission explained in detail how the attackers evaded the bureaucracies. Add to this list the Internal Revenue Service, an agency of extraordinary power that has forfeited the public’s trust.
Will liberals ever lose their faith in big government bureaucracies?
First Lady Michelle Obama will jet off to Omaha, Nebraska, where she'll attend an Obama campaign fundraiser. Hosting the Omaha event (attendees who donate $5,000 can meet and take a photo with the First Lady) will be none other than Warren Buffett, the "Oracle of Omaha," an Obama campaign official told Mother Jones. And joining Michelle Obama and Warren Buffett at the Omaha fundraiser will be Susie Buffett, Warren's daughter and a philanthropist herself.
President Obama turned to Warren Buffett when naming his plan to raise taxes on those earning a million dollars or more a year. And in 2012, Obama has used the so-called Buffett Rule—and Republican opposition to it—as a hammer with which to bash Republicans and as a way to highlight Mitt Romney's support for lowering taxes on the rich. Obama only amped up the criticism after the Senate killed the Buffett Rule in mid-April. ...
President Obama, Vice President Joe Biden, the First Lady, and their allies have repeatedly invoked the Buffett name on their travels around the country to raise money ....
And so today's announcement that Buffett will help finance Burger King's tax inversion is both amusing and illuminating:
Mr. Buffett's Berkshire Hathaway Inc. BRKB +0.34% would invest in the deal in the form of preferred shares, some of the people said. Berkshire is expected to provide about 25% of the deal's financing, one of the people said.
As the WSJ wryly observed this am, "Buffett's inversion play looks awkward for the White House."
What can we infer from this? I must admit at the outset that I'm no fan of Buffett's professed politics (or somewhat odd personal life), so I'm biased and I'd be interested to know what a Buffett fan like Larry Cunningham thinks, but here's my take:
Like a lot of (all?) limousine liberals, Buffett is happy to support tax increases because he knows they won't really affect him. Billionaires can hire as many $1000/hour tax lawyers as they need to run tax avoidance devices--like corporate tax inversions--that are simply unavailable to the middle class. We can't afford their high priced lawyers or their complex strategies, so we get screwed while they get a free pass. Leona Helmsley was right: "We don't pay taxes. Only the little people pay taxes." Buffett's too smart to say so, but ....
Politics is one thing but profit is another. Buffett was perfectly willing to throw both Obama and Buffett's own tax blathering under the bus when it suited him.
Obama's going to need a new favorite billionaire until such time as Buffett makes nice by helping to finance Obama's presidential library.
And a question: Will the Occupy Wall Street types calling for a Burger King boycott now try to boycott Berkshire Hathaway? I doubt it, mainly because I doubt whether they're capable of figuring out what Berkshire Hathaway does.
Update: In fairness, I should note that FT.com is reporting that:
Berkshire Hathaway’s taxes, at least, will be higher rather than lower as a result of the inversion. Dividends on its $3bn of preferred stock will be taxed at the 35 per cent rate for foreign dividends, rather than the 14 per cent rate that would prevail in the US, according to people familiar with the arrangements. The company will pay an extra $60m a year to the US Treasury as a result.
On the other hand, FT.com is also reporting that:
Mr Buffett is said to have negotiated for a higher dividend to compensate Berkshire Hathaway for the higher taxes.
Plus, of course, Buffett will also benefit to the extent that Burger King's tax savings increase the value of the BK preferred stock he will own. So I think my point stands.
Being POTUS is the most important job in the world. You're supposed to be the leader of the free world (not that the current job holder seems very interested in that part of his duties). You wield the most powerful military in history, the biggest bully pulpit in the world, set domestic policy for the largest economy in the world, and so on and on.
We have seen in the last few years what a disaster one gets when one elects an inexperienced amateur, which brings me to that tweet.
Elizabeth Warren was a serious and deservedly respected bankruptcy law professor at Harvard. But she's only been in the US Senate since January 2013--less than 2 freaking years!--and has zero--as in nada, zilch, no--executive experience of any relevance.
I hope the Democrats at least have the good sense to nominate somebody with experience as a Governor or Mayor, so that their candidate has actually had some experience in doing executive things like, say, meeting a budget. At least that way their candidate will just have bad ideas, because bad ideas coupled with inexperience has not been very fruitful.
It's tough to care about money when you're the daughter of millionaires and married to a millionaire hedge fund manager, so can we really faultChelsea Clinton for saying she tried, but failed, to care about money? ...
Chelsea, the poorest of the Clinton clan with a net worth of just $15 million (Bill and Hillary are worth more than $150 million), told Britain's Telegraph that the reason she jumped from nepotism-provided lucrative career to nepotism-provided lucrative career was because she was trying to branch out from her parents and care about money.
“It is frustrating, because who wants to grow up and follow their parents?” Clinton said. “I’ve tried really hard to care about things that were very different from my parents. I was curious if I could care about [money] on some fundamental level, and I couldn’t. That wasn’t the metric of success I wanted in my life.”
There are very few things I find more annoying than left-liberal trust fund babies like Clinton. Sadly, given the increasingly dynastic nature of our so-called democracy, she'll probably run for President in 2034 and, worse yet, win.