Books - Q2 2023

[Previously: Q1 2023, Q4 2022, Q3 2022, Q2 2022, Q1 2022, our 2021 Book Review Compendium, 2020 Book Review Compendium, 2019 book compendium, 2018 book compendium, and pre-2018 book compendium.]

• Baby Catcher: Chronicles of a Modern Midwife (4/5) File this under Studies in Iatrogenics. Steve Sailer has pointed out a marriage gap, whereby white women who have been married for a long time vote pretty solidly Republican. It occurs to us that people who are responsible for a family and especially children get more red-pilled, and we see this with women on topics of health and wellness. Questioning the mRNA gene therapy shots leads you down the rabbithole of questioning all vaccines. Kubrick mocked fluoride skeptics in Dr. Strangelove, but on Facebook and Instagram, moms talk about how to filter it out of their household water (disinformation!). Another eye-opener for women is when they try to have a baby and the medical-industrial system gets a hold of them and tries to force them through lucrative but unpleasant and often unnecessary interventions. E.g.: "Do you realize that women who see our midwives have cesareans a third less often than women who are cared for by the obstetricians?" This author, who worked as a midwife both in-hospital and at home births, quotes a typical obstetrician: "Normal birth is a retrospective diagnosis. No birth is normal until after the fact. All births are complicated until proven otherwise." She says that's the definition of the difference between doctors and midwives. She tells women to stay home as long as possible even if they are planning on a hospital birth. The doctors make interventions to speed things along for their own convenience, but they don't have a chance to do so if the patient doesn't arrive too early. Here's a great birth story: "A cellist surrounded herself with four musician friends from the San Francisco Symphony, requesting they each take a different instrument's part of Beethoven's 'Ode to Joy' and hum to her while she labored. She carried the main melody, and her friends wove in and out in counterpoint, louder as the contraction peaked and fading to a whisper as it died away. With tears in his eyes, her awed husband knelt at her side and watched her wave her hand in the air as she conducted her labor opus."
• Capital Returns: Investing Through the Capital Cycle: A Money Manager’s Reports 2002-15 (5/5) [See full review.] A"first-of-a-kind" disconnect between cash flow and reinvestment! We have the opposite of an overly optimistic demand forecast in oil and gas; we have an overly pessimistic demand forecast, because of the energy transition delusion. That pessimism should prolong the capital cycle in the industry; it also implies that we are still in the early innings of the investment, since we have reached neither a point of management optimism and confidence, nor a high proportion of cash flows reinvested in capital expenditure. (Also: even though the oil and gas industry as a whole is spending less than 100% of FCF and returning capital rather than raising it, which are both signs of being early in the capital cycle, the U.S. shalecos are spending too much on capex.)
• Lone Star: A History Of Texas And The Texans (5/5) Lone Star is an important addition to a curriculum that we are developing about manifest destiny and ecological reality. Peter Turchin has re-popularized the concept of asabiyya from Ibn Khaldun: the idea that groups have different degrees of cooperation among their members, meaning different capacities for concerted collective action. He thinks that groups with high asabiyya arise on meta-ethnic frontiers, where between-group competition is very intense. Texians have had the greatest asabiyya on the American continent. It was formed in them because they were wedged in between the Spanish/Mexican empire, the Comanche, and the Yankee empire - all of whom they had to fight during the 19th Century. Even now some of that asabiyya remains (though much diminished). You can see it in Doyle Brunson, or in the fact that the Alamo is still defended. (During the 20th Century, that bellicosity was a problem as it led to disproportionate participation by Texans in the World Wars and other pointless conflicts.) Author T. R. Fehrenbach wrote Lone Star in the 1960s. He was reasonably politically correct for his time, but the ground has shifted such that Texas Monthly recently declared it time to "reexamine" the book. (This reviewer captured T.R.F. quite well: "Let no one think Fehrenbach had a racialist contempt for the Indians. His book on the Comanches is one of the great monuments to any people in history, and rises IMO to a great work of literature. If anything the main thrust of his Texas histories is 'Here was a people so awesome and ferocious and alpha that they could only be subdued by a warrior race even more awesome and ferocious and alpha than them: the Anglo-Celtic American'.") Fortunately for Texas, it is impossible to recount the story of Texians, especially the Texas Republic and the defenders of the Alamo, without glorifying them. (Hence: "In 1914 a Japanese professor wrote a poem commemorating the defenders of the Alamo and comparing them to the samurai.") In 1846, Samuel Colt designed a six-shot, single action revolver to the specifications of a Texas Ranger captain named Samuel Hamilton Walker. Known as the Colt Walker, it seems like any proud Texian should aspire to have one (Clint Eastwood carried two in The Outlaw Josey Wales). The other thing that Texians aspire to is land ownership: "Land acquired a prestige value in Texas not unlike the landed estate in 18th-century England. Almost universally, successful politicians bought ranches... Texans thought in property, not financial terms; they preferred land to paper values." The best land is land with hydrocarbons underneath it.
• Rise of the Mining Royalty Companies (4/5) This was written by a former exploration geologist for Anaconda Copper who went on to co-found International Royalty Corporation, which was acquired by Royal Gold in 2010. It has brief case studies of eleven hard rock mining royalty companies: Franco-Nevada (FNV), Royal Gold (RGLD), Wheaton Precious Metals (WPM), Altius Minerals (ATUSF), International Royalty Corp (now part of RGLD), Sandstorm Gold (SAND), Osisko Gold Royalties (OR), Metalla Royalty & Streaming (MTA), Gold Royalty Corp (GROY), Maverix Metals (acquired by Triple Flag), and Triple Flag Precious Metals (TFPM). (There are also some very brief notes on junior companies like Vox Royalty.) Something notable about royalty companies, of course, is that they have the very highest revenue and profit per employee compared with other business models. (Horizon Kinetics is obsessed with royalties.) The obvious answer to finding royalties to buy is to purchase them in the secondary market from prospectors or mining companies. But another idea is for the royalty company itself to assemble land packages, do drilling to establish the geological value, and then sell the package to a mining operator and retain a royalty. The founders of FNV point out something about miners: "[W]e expected there would be more torque with the gold operating companies. The reality turned out to be that the operating companies allowed costs to rise along with the gold price. Margins stayed the same despite a rising gold price." Interesting: "the focus on debt reduction rather than buying royalties left the door open for Royal Gold, Silver Wheaton, and International Royalty Corporation to grow..." Important: the royalty business has a significantly lower cost of capital (i.e. trades at higher multiples) than the miners. "We could buy assets from producing companies at a price far superior to their internal valuation." "The secret sauce is the premium afforded to the royalty and stream business model. Without that, there would be no attractive cost of capital and no value arbitrage in acquiring new assets." Altius strategy: "...keep project-generation costs as low as possible and try to attract partners to farm in and fund the more expensive exploration and drilling. The logic was rooted in fending off corporate-level equity dilution in favor of taking it at the individual projects level..." Capital cycle indicators from when miners peaked: "Practically any junior mining promoter had easy access to capital. [...] Anyone invested in mining at this point in the cycle was generally flush with cash already, and so we were challenged (in some cases almost angrily) to reinvest and further grow the business." "Everywhere you looked there were mining-specialty equity funds ready and willing to write checks..." (!) Interesting mispricing: "Even today, the financial markets continue to think that a dollar of gold flash flow has more intrinsic value than a dollar of nickel cash flow." Another strategy for buying interests: "We'd have to make it appealing for these royalty holders to let go of their prized asset. We'd need to offer something better than a big check. A platform offering daily liquidity, public market premiums, and diversification might convince them..." Call that the Dorchester strategy.
  
• F.D.R.'s Undeclared War 1939 to 1941 (4/5) This was written by T.R. Fehrenbach before he wrote Lone Star. The upshot is that Fehrenbach thinks that FDR wanted war with Germany, actively provoked and planned for it despite overwhelming isolationist sentiment in the country, but Fehrenbach thought this was a good thing. So, our guess about his politics after reading Lone Star was correct. If Fehrenbach were alive today and on Twitter, he would almost certainly have a Ukraine flag after his handle. And this book is down the memory hole, because it conflicts with the Pearl Harbor "surprise attack" mythology of World War Two. Actually, as Paul Colinvaux would tell you, the ultimate winner of a war is very likely to have been the aggressor.