Presidents' Day Links

• The best way to protect against such a scenario is to recognize the volatility in these sub-industries and to invest in efficient, capital light business models that are less susceptible to striking out. Tempting as it may be to try to hit a home run and embrace companies with the highest leverage to higher hard asset prices (i.e., indebted mining and energy extraction companies), these businesses are far more prone to the permanent impairment of capital. On the other hand, capital light businesses are consistently hitting singles and doubles, slowly compounding value. This summarizes our strategy and positioning: though returns may be variable, we emphasize companies that we are confident can prosper through drawdowns and compound capital over time. [Horizon Kinetics]
• The Fed's drive to push rates higher has made a significant difference in the inflation fundamentals, because they have dramatically altered the incentives to borrow, spend, and hold money. Higher rates have NOT adversely impacted the economy like they have in the past, moreover. Why not? Because the Fed has limited its tightening to interest rates while leaving an abundance of bank reserves in the system. It's not really the case that money is "tight" in the sense that it's hard to come by. The Fed has responded to the abundance of liquidity (and the 2020-2021 surge in the M2 money supply) by dramatically increasing (using the tool of higher interest rates) the world's incentives to hold on to money rather than to just spend it wantonly. And it's working. [Scott Grannis]
• Connected to this, the second part of our column, on last weekend’s Super Bowl ads. What do we discern from them about how the nation’s ad makers see their country? That we’re a nation of morons, a people with fractured concentration, a people with no ability to follow even a 60-second spot, a people who need loud noises and obsess on media and respond only to movie stars playing movie stars spoofing movie stars. The feeling was one of exhaustion, of a culture folding in on itself. [Peggy Noonan]
• As a businessman, Bill was anachronous; he hated banks, cash registers, bookkeeping, and salesmen. If the saloon became crowded, he would close up early, saying, “I’m getting too confounded much trade in here.” Agents for the brewery from which he bought his ale often tried to get him to open a checking account; he stubbornly continued to pay his ale bills with currency, largely silver. He would count out the money four or five times and hand it to the driver in a paper bag. [The New Yorker]
• The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. You probably heard about Thomas Piketty's Capital in the Twenty-First Century, the book arguing that as long as the return on capital exceeded the rate of economic growth, the rich would end up owning everything without external shocks. But you might have decided that this book did not sound nearly metal enough, in which case you should check out The Great Leveler, which takes a similar approach but focuses almost entirely on the wars, revolutions, state collapses, and pandemics that reset economic inequality. This book raises a fun question: what if the average rate of return on wealth is indeed higher than the rate of economic growth, but this is offset by higher variance? Great instances of leveling are typically bad (total war, plague, communism, etc.), but in those scenarios the rich have more material wealth to lose. The book is heavily statistical; as it turns out, you can get pretty good indications of historical income distributions by measuring house sizes, for example. Bits of it are horrifying, like the various descriptions of communist takeovers with their landlord-execution quotas and the like. And some are poignant, like the detail that after the collapse of Ancient Egyptian civilization, people still decorated coffins with hieroglyphs—but they'd forgotten how to write, so the hieroglyphs they used just spelled out nonsense. [The Diff]
• Competently illustrating this weak-kneed and incoherent line of thought among the modern Right, Peter Hitchens wrote a recent piece in First Things about Franco. Hitchens was, in fact, also reviewing Moradellios’s book, and his review exquisitely demonstrates this intellectual confusion and theological incoherence. He goes on at great length about the evils of the Republicans and how their victory would have been disastrous for Spain. But then he goes on at greater length telling us that Christians cannot look to Franco, because he committed “crimes,” none of which are specified in the review (or, for that matter, in the book being reviewed), probably because to specify them would make them seem not very crime-like. We must therefore reject Franco, Hitchens tells us, for an unspecified alternative that was most definitely not on offer in 1936, and is probably not going to be on offer if, in the future, we are faced with similar circumstances. This is foolishness. [The Worthy House] 
  
• In 1876, the state constitution set aside a million acres of public land to support a university system. A tract of land in West Texas was chosen and eventually swelled to a couple of million acres. That’s not as high-minded as it seems; the land was deemed so worthless that nobody bothered to survey it. Along came an oilman named Frank T. Pickrell, who, in the early nineteen-twenties, decided to drill a well on that land. At the time, the oil play was all on the east side of the state. Pickrell chose the site not because of a geologist’s report but because it was close to the railroad. He went to New York to reassure investors, including a group of Catholic women who had taken the plunge. They handed Pickrell a red rose that had been blessed by a priest, and directed him to climb the derrick and scatter the petals while christening the well Santa Rita, for the patron saint of impossible causes. He did as they suggested. The well tapped into the Permian Basin, the largest oil field in American history. “That changed everything,” J. B. Milliken, the chancellor of the U.T. system, told me. The system now has the nation’s largest public-university endowment—sixty-six billion dollars. The Santa Rita No. 1 rig sits on the edge of the Austin campus, near the football stadium. [The New Yorker]
  
• Valedictory or visionary? Is there a choice? Could Mozart, who finished this concerto about eight weeks before he died, have been anything other than valedictory? Yet in his letter from Vienna to Constanze in Baden, written at midnight on October 7, 1791, he says, ‘I smoked a glorious pipe of tobacco. Then I orchestrated almost the entire Rondo of the Stadler concerto.’ No premonitions of death here. Or in his next letter to her on October 14, describing his delight at the success of Die Zauberflöte and only voicing some concern about finding a good school for their young son Carl. [Gramophone]
• New Parent Thread. I became a father almost 2 weeks ago. Here are some thoughts and things that I've noticed since his birth. Platitudes that you hear all the time that turned out to be true: Your life changes forever. The love you have for your kid really is different than any other kind. Having a baby is exhausting. It's almost impossible to be blackpilled. How can you be hopeless when you love something with so much potential and want their future to be good? It had been about 10 years since I had been to a hospital. I had forgotten the steepness in quality between a good nurse and a bad nurse. A 9/10 nurse is like an angel, and a 4/10 nurse feels like a nightmare. If your nurse has a neck tattoo, they probably aren't a good nurse. The quality food even at the hospital varied between Panera Bread quality (chicken mixed green salad) and inedible (world's worst omelette). The amount of times that nurses, doctors, and hospital staff asked if I wanted my baby to be circumcised was disconcerting. I thought I only had to answer the question once, not 6 times. The scariest drive of your life is the one going home from the hospital with your newborn. I spent so much time reading about pregnancy stuff that I forgot to read about what to do after he's born, but I figure that as long as I keep him fed and change his diaper he'll be fine for at least 6 months. Every time I've asked someone for general advice for a new dad, it essentially boils down to 2 categories: 1. If someone offers help, take it. 2. Kids are tougher than you think. Try not to overthink mistakes. It's nice knowing that we have decent knowledge of his genealogy. My kid is a 6th generation Georgian on my wife's side with deep roots in the area, and I have records of my lineage back to when the Huguenots fled to the UK in the 1600s. I wish that I had him younger, but there was always a good excuse. I would advise anyone who is holding off to have kids as early as you can. It's worth it all. The amount that hospitals charge to deliver a kid is truly insane. Thank god I have a really good healthcare policy with my job. Grandparents and great-grandparents were almost more excited than we were. Based on what I've heard, being a grandparent is more fun, but being a parent is more rewarding. [@Brownkyl1]