Me speaking about water and the long-term

 “There is a recognition that we need businesses and investors to play their part in tackling some of the challenges we face. But all investors are just interested in a quick buck right? Wrong.

Increasingly there is a recognition that we need businesses and their investors to play their part in tackling some of the challenges we face, such as climate change. But all investors are just interested in a quick buck right? Wrong.

Ben Yeoh is senior portfolio manager at Royal Bank of Canada Global Asset Management, managing global equities as an investment manager. He is a leading proponent of ESG – or ‘sustainable investing’. We spoke to Ben to find out more.



US tax cuts, little short term macro impacts

“The U.S. economy’s strong 2018 performance happened without much health from the massive tax cut President Donald Trump ushered through the previous year, according to a study released this week by CRS.

An in-depth look by the nonpartisan Congressional Research Service indicated that not only did the rollbacks in business and personal rates have little macro impact, but they also delivered the most benefits to corporations and the rich, with little boost to wages.

In all, GDP rose 2.9% for the full calendar year, the best performance since the financial crisis. But that came in an economy already poised to move higher, economists Jane Gravelle and Donald Marples wrote.

“On the whole, the growth effects [from the cuts] tend to show a relatively small (if any) first-year effect on the economy,” the report said. “Although examining the growth rates cannot indicate the effects of the tax cut on GDP, it does tend to rule out very large effects in the near term.”

 (Long Study)



The Impact of Legalized Abortion on Crime over the Last Two Decades

Crime rates in the U.S. have fallen by about half since the early 1990s. A new working paper from the National Bureau of Economic Research finds that legalized abortion following the Supreme Court’s landmark Roe v. Wade decision in 1973 accounts for 45% of the decline in crime rates over the past two/three decades.

“…Donohue and Levitt (2001) presented evidence that the legalization of abortion in the early 1970s played an important role in the crime drop of the 1990s. That paper concluded with a strong out-of-sample prediction regarding the next two decades: “When a steady state is reached roughly twenty years from now, the impact of abortion will be roughly twice as great as the impact felt so far. Our results suggest that all else equal, legalized abortion will account for persistent declines of 1 percent a year in crime over the next two decades.” Estimating parallel specifications to the original paper, but using the seventeen years of data generated after that paper was written, we find strong support for the prediction. The estimated coefficient on legalized abortion is actually larger in the latter period than it was in the initial dataset in almost all specifications. We estimate that crime fell roughly 20% between 1997 and 2014 due to legalized abortion. The cumulative impact of legalized abortion on crime is roughly 45%, accounting for a very substantial portion of the roughly 50-55% overall decline from the peak of crime in the early 1990s. …”

Here is the NBER link, to paper and a backround on the debates are it here:

Taleb on Dalio, Capitalism not broken - it's skin in the game

Ray Dalio has opined on how capitalism needs reform.*

Nassim Taleb somewhat disagrees and points the blame at a lack of skin in the game for corporate managers, and the problem of big corporations over a move localist, decentralised world. Taleb is consistently localist over globalist.

Taleb: “…...I like Ray as a person. I like him personally but I think this point of view is profoundly mistaken because it's not capitalism that's wrong. It's absence of skin in the game. That is wrong. Absent yes going back to risk taking going back to risk taking. Absence of accountability. You have people making decisions that harm others without being harmed. That's not capitalism that's corporatists. Who are we talking about. What I would say is the structure that we have today Israel has skin in the game. Gray hat's kind of game was his fun. But he doesn't really protect to society where we have centralization of people in Washington making decisions like Alan Greenspan that affect this whole country. And when people you know are harmed they don't pay the price. Well that that one person is Jay Powell now the chairman of the Federal Reserve. Yes. But he's more responsible OK because he he understands the job of the Federal Reserve should be minimum harm not policies that may entail side effects more generally. Jay Powell gets that better than Alan Greenspan. He gets a lot better but of course he's not the great Volcker Volcker. OK. Not yet. OK. Hasn't Sean a swan. No let's go back to the core problem is you want to live in a society that is decentralized enough that people who make a mistake are also harmed by their sit by their mistake not just inflict harm on other bailed out. What happened is we have evolved into thanks to a large state to a situation of corporatism those close to the state are bailed out It's crony capitalism. That's not capitalism crony cup. How do you fix it. There are a lot of that. I wrote a whole book on it. The skin in the game. I wrote a whole book about it. Skin in the game. So for those who haven't read the book. OK. So the idea is is locally. First of all the shameful to make a recommendation without being harm. OK. If something goes wrong it forecast without having some skin in the game sense being harmed by it how you structure a society in a way to be smaller companies. Is that not what happened is the minute we decentralize be like Germany when you decentralized…” H/T Bloomberg markets interview.

*A blog on Ray Dalio’s piece on Reforming Capitalism

Taleb on Climate:

Taleb Commencement address