Welcome to another edition of The Mueller Report!
Updates
The entire Mueller household, myself excepted, has been sick with a nasty cold. it’s been something of a plague in our circles. It affects infants and children the most. We’ve had multiple friends put some of their kids on oxygen (which is partially due to our high altitude) and at least one was hospitalized.
Sickness is a visceral reminder that this world is not our final home; that it is marred by the Fall. C. S. Lewis wrote that God whispers to us pleasure, speaks to us through conscience, but shouts in our pain — it’s his “megaphone to rouse a deaf world.” There is a lot of truth to that. I remind my kids (and myself), that as much as we hate being sick, we should hate our sin even more. Though largely unseen, our diseased spiritual state is much more dire than any physical ailment.
Changing habits and routines can be difficult - especially with everyone feeling very off. I’ve been thinking more about which changes are most important and where to focus my energy and time (which may be more limited than I care to admit).
News
Tesla has been in the news a fair amount recently. Their growth projections have slowed, they’ve run into all kinds of problems getting their Cyber truck production ramped up, and just this week a Delaware court has ordered them to undo a ~$50 billion compensation package for Elon Musk from several years ago. The electrical vehicle market is in flux at the moment, to say the least. Some Chinese firms are expanding their production and market share rapidly - yet this may turn out like their real estate industry with “ghost” cities and huge amounts of unused cars.
This isn’t exactly news, but I’ve learned about a lot of state legislative action to slow or reverse ESG priorities. Florida and Texas passed legislation last year defunding or outright banning DEI programs in their state universities. They also have passed legislation directing their pension funds to not include ESG criteria in their investment decisions and, in some cases, not to use financial firms that advance ESG priorities - which includes nearly all the big financial firms.
Furthermore, Republican state attorney generals sent a letter to major U. S. insurers that had signed onto a global insurance climate initiative that they were in danger of being considered as “colluding” in restraint of trade as well as compromising their fiduciary duty to their customers. In short order, the major U. S insurers pulled out of this global climate initiative.
I’ve learned that a surprising amount can be done at local levels to resist the ESG agenda - from managing school district funds to municipal and state pensions funds, to secretary of state, state legislatures, state treasurers, etc. It will be interesting to see how federal, state, and local policy will evolve on ESG issues and what the ESG crowd will do to continue pushing their agenda to remake the global economy.
Reflection
I’ve been reflecting recently on how to hold success and productivity loosely. I care a lot about increasing capacity, creativity, hard work, and value creation. As a result, I realize that I sometimes associate my identity too closely with what I do and produce, rather than what is true about me in God’s sight. As a result, my moods can vary based on how much I have gotten done in a given day (according to my subjective assessment or feedback from others).
This both fuels some anxiety about “measuring up” to some standard and also discontent when not meeting relatively arbitrary expectations or benchmarks I’ve set for myself. Pursuing peace and contentment for me (and I imagine for many Type A people), involves reframing productivity and success. This is different from just ignoring it, which has often been my go to method of dealing with discontent.
Instead, having a psyche centered on Christ’s love and sufficiency can fuel hard-work but also contentment in the face of “not measuring up.” This is hardly a unique or profound take, but I thought I would share it for those of you in a similar boat to me.
(I wanted to develop these ideas further, but I am out of time for this newsletter.)
Writing
I’ve “finished” my white paper about the political and economic impact of Environmental, Social, and Governance criteria. I use scare quotes because the process is not truly over - now it will be reviewed and edited by various folks which will lead to other changes and edits. But substantively, it’s done.
I also finished two editorials for the Examiner that should come out in a special edition in a week and a half. I also submitted a piece on the economy to AIER’s Daily Economy. I’m not sure when it will come out, but I’ll share the basic summary here:
“Is this the best economy or the worst economy?” That’s how the piece begins. It continues:
Many people say that the U. S. economy is doing great. We have had record stock prices, modest GDP growth, low unemployment, and falling inflation. Current economic forecasts have grown more positive and consumer sentiment has improved. Even real wages, which fell during the high inflation of 2021 and 2022, have begun recovering. Not only is official unemployment low, but labor force participation has also been recovering from its low after the disastrous COVID policy in 2020.
Given the dire predictions and expectations of most economists (me included), 2023 was a good year for the economy. This is particularly evident if you compare the United States with other developed countries. Europe’s growth was slow. Many other developing countries had subdued growth in 2023….But there are also reasons to suspect that we may be in the eye of the storm, not in its rearview mirror.
However, millions of Americans “have only seen higher prices. And from their standpoint, this is the worst of economies.”
One issue is distress in the commercial real estate market. Office occupancy has still not recovered to pre-pandemic levels in most places – and in badly governed cities like San Francisco and Chicago, it may not recover for decades. Companies that bought and financed commercial buildings before 2020 have been struggling with their loan payments – especially those that have floating rate debt or balloon payments requiring refinancing. The financial woes of commercial real estate companies can quickly become financial woes of the regional banks who lent them trillions of dollars in the first place and could be left holding the bag of depreciated office buildings.
Government spending will also become a drag on the economy soon. Artificial economic stimulus through massive spending bills like the IRA, infrastructure bill, CHIPS Act, etc. will taper off as the months go by. But politicians and bureaucrats don’t have a magical crystal ball telling them which projects, technology, or companies will be successful. Much of this extra spending, while billed as investment, will likely end up wasted on inefficient companies and unproductive projects.
This connects to another future drag on economic growth: government deficits and debt. It’s no secret that U. S. national debt has been growing at an alarming rate over the past two decades. In an era of high interest rates, that growing federal debt has become a big problem for government budgets. Last year the U. S. government spent about $875 billion dollars in interest on the debt. That’s more than the federal government spent in its entirety in 1983. There are three possible resolution scenarios to federal government borrowing and spending – none of them good for economic growth in the near term.
The scenarios involve either higher interest rates, higher inflation, or significant declines in government spending.
While these three scenarios have different long-term effects, none of them look good for the economy over the next 12-24 months….Has the storm passed or are we in the eye of it?
If only we had a crystal ball.
Game Corner
We’ve been playing Race for the Galaxy quite often over the past month. The game works great for two, three, or four players. It is a card-based game with similar dynamics to Puerto Rico. You’re goal is to gain the most victory points. You gain them based upon settling planets, shipping goods, and building development cards.
Players simultaneously choose what Action/Phase they want to do for the round. All player participate in each of the phases, but when a player selects that phase they receive some special bonus activity. The game lends itself to different strategies: military build-up, good production, or specializing in alien technology are three common ones.
Although you are competing with other players, most of your play is independent. You don’t steal or trade cards or goods with other players. The main interaction has to do with participating in the same phases. The game ends when a player has built twelve cards or all the victory points have been gained.
Have a great weekend!
Thanks for the Report. Plus, sorry to hear about the family-wide illness.
I suspect qualifying the economy as “best" or "worst" depends on where you stand on the socioeconomic ladder. Those in the upper middle class or those above are doing fine and in some cases well. Those in middle class or those below are negatively impacted and, in some cases, struggling significantly. In fact, I believe the disparity between these two groups will increase over the next 1-3 years much as it did during the late 70's and early 80's.
It is quite noticeable when purchasing items sold on close margins which includes many staples such as groceries, fuel, building materials, etc. And in some cases, it also includes those where competition is less profound such car prices, airline tickets, entertainment, etc.
Shalom. -- Duane