Reunions

And fallout from the presidential debate

Welcome to another edition of The Mueller Report!

Hope you are having a good weekend! We are on the move again visiting with Hillsdale friends. Our alma mater has been running an annual alumni weekend on campus for four years now. It’s really a neat experience. First, it focuses on family activities. They provide long stretches of childcare for the adults to attend lectures, hangout, or take tours of campus. They also have several outdoor activities (like bouncy houses, water activities, etc.)

They make use of their dormitory facilities – which, to be honest, feels a lot like urban camping. But it also facilitates lots of interaction with other families, especially once the kids are all in bed and everyone is in the same building/vicinity.

Our family of seven is decidedly average at this gathering. Most families have 3, 4, 5, or 6 children. It’s also neat to reconnect with folks that we haven’t seen in a decade. It also reveals the strong culture created at Hillsdale College and the imprint that culture leaves on its graduates. I’m struck by how many people we run into that we don’t know really well but I think, “We could totally be good friends if we lived in the same community.”

Bookshelf

Last week I finally finished a long book about Environmental, Social, and Governance investing by a former Blackrock manager, Terrence Kealey, called Sustainable. This guy knows a lot about ESG investing. There are so many different flavors of ESG investing – avoiding companies with low scores, investing in companies whose scores you want to improve, focusing on companies with individual high scores in “E,” “S,” or “G.”

He also knows better than almost anyone the limitations of ESG-focused investment. ESG ratings vary widely depending on which firm or analyst is making them. At this point, much of the ESG movement and rating system focuses on “talk” and “plans” that are ESG sustainable rather than on actual behavior. He says that for those who really care about changing the world in specific ways, general ESG investing has relatively little to offer.

Another point he raises that I plan on writing about in the coming week or two, is ESG’s substitution problem. A public oil and gas company, for example, that sells off some of their oil or gas reserves to reduce their carbon footprint and move closer to “net zero” receives significant accolades from the ESG community. However, they usually sell those fossil fuel assets to either a private company or a large government oil and gas company. Whoever they sell it to will almost certainly keep pulling oil and gas out of the ground.

So we have improvements in ESG scores with literally no “improvement” in greenhouse gas emissions. In a similar way Europe and increasingly the U. S. are merely exporting their greenhouse gas production. By driving energy costs through the roof, and creating ever stricter regulations on greenhouse gas emissions, they are increasingly driving heavy industry and manufacturing into countries with cheaper energy and more lax regulation – namely China and India. So while ESG activists pat themselves on the back for moving us toward a “green” or “low-carbon” economy, their efforts do little to change the global situation. They are just making their countries poorer and less dynamic.

Sustainable is a good book if you want to take a deep dive into the world of ESG investing. But it’s not one I would recommend to the casually interested reader. You can read some of my work instead!

Writing

I’m not going to put a lot here this week, but you can find my most recent op ed at the Washington Examiner discussing problems with ESG ratings.

Reflection

I’m short on time and not a political pundit, but it might be worth relating a few thoughts about commentary on the presidential debate this past week:

1)        Public opinion and commentary have changed dramatically. The conversation for the past several months has been about how Trump and Biden are close in many key states. Some polls put Trump in the lead, others suggest they are neck and neck, and others that Trump is trailing. No more. The conclusion of most commentators after Thursdays debate is: “Biden can’t possibly win the 2024 election.”

2)        Having the first debate in June may be a stroke of luck for the Democrats in the sense that they can scramble for an alternative. If this debate had happened in September or October, the election would likely be over.

3)        Who knows what the summer will bring. There will likely be a mad scramble on the left to become the nominee BUT there is no clear process for determining this since the primaries are over. ALSO, at the moment Biden seems uninterested in stepping aside.

4)        The other conclusion a number of people have drawn is that we currently have a shadow state – Biden’s handlers are running the White House and likely have been for a while. I’m not sure what the precedent for this is; perhaps a particularly weak-willed previous president might be said to be similar. But it also seems clear that Biden is being used by his staff and his family in pretty abhorrent ways.

Game Corner

Last week Kathryn and I were able to sit down and play an older game (for us) called: Carcassonne. The play involves tiles and little “meeple” pieces. The starting tile has part of a city, a road, and a field on it. The other tiles have different variations and shapes of cities, roads, and fields. Players alternate drawing a random tile and then adding it to the board (road to road, field to field, city to city). You can’t add tiles that don’t “fit.”

You use your worker pieces to claim something on the tile you place. Roads are worth 1 point per road segment. Cities are worth two pieces per city segment once the city is finished. Fields are worth three points per completed city in the field at the end of the game. One other tile type is called a cloister. The cloister piece is worth one point for every adjacent tile (including itself and corners for a maximum of nine points).

Here are a few important rules. 1) You can’t claim something (field, city, road) that attaches to one already claimed by other players – including yourself; 2) once you place a piece on the board, you can’t retrieve it until that city, road, or cloister is complete – for fields, you never reclaim the piece since it is scored at the end of the game; 3) whoever has the most pieces on a terrain type gets the points – for a tie both players get all the points.

Cities get you a lot of points, but they can be tricky to finish because some city pieces have three or four open sides to them. You also have to manage your pieces well. You want to claim areas to get points, but you also don’t want to run out of pieces by having them all committed simultaneously.

It’s a fun easy game that even relatively young children can play.

Have a great week and a great 4^th of July if I don’t write again before the holiday!