A Benefit Worth (Largely) Preserving

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From CNBC:

Republicans are considering extending the enhanced unemployment insurance benefit at a dramatically reduced level of $400 per month, or $100 a week, through the rest of the year, sources told CNBC.

Congress passed a $600 per week, or $2,400 a month, boost to jobless benefits in March to deal with a wave of unemployment unseen in decades as states shut down their economies to combat the coronavirus pandemic. The policy expires at the end of July as the U.S. unemployment rate stands above 11%, despite two strong months of job growth.

The GOP, which has not made a final decision on how it will craft unemployment insurance in a bill set to be released this week, previously discussed extending the benefit at an additional $200 per week instead of $600. Democrats want to make the $600 per week sum available at least until next year.

There are good arguments to be made for reducing the enhanced benefit from its current level, but a reduction to $100 (or even $200) seems to me like too great a cut too soon.

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High Stakes

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In a CNBC interview, former Goldman Sachs Asset Management Chairman Jim O’Neill became the latest figure to use COVID-19 as a recruiting sergeant for a preferred cause — in O’Neill’s case, “stakeholder capitalism.”

CNBC:

“People that run really successful businesses have to be thinking about something a bit more than just an outright obsession with maximization of profit and playing their own role in trying to deal with some societal challenges,” he said.

O’Neill, who is currently Chair of Chatham House, said companies could be moving into a new era of “stakeholder capitalism,” where they must act beyond the interests of their shareholders.

O’Neill [also] said politicians could find “huge political appeal” among younger voters by requiring companies to emphasize environmental issues.

O’Neill is hardly the only person to embrace stakeholder capitalism. To take just a few examples, it has been touted with dreary predictability by the Davos crowd but also by the Business Roundtable, an organization that should know better. Making matters even worse, the businesspeople pushing the stakeholder agenda include not only corporate managers (increasingly indifferent to the obligation they owe the shareholders of the companies for which they work), but investment managers, who once believed that it was their duty to grow the money entrusted to them.

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Sweet on Short

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Selling a security short has rarely been a way to make friends, whether with investors, companies, regulators, or even governments. If the Fed’s job included (in more disciplined times) taking “away the punch bowl just as the party gets going,” the short seller was and is the person who tells partygoers that the punch they are so enjoying is, in fact, poison. No one wants to hear that.

Bubbles, on the other hand, whether in a stock, sector or market, are popular. And the bigger the bubble, the more popular it becomes: “Everyone” is making money, “everyone” is spending money, and governments take their slice. The boost to revenues that comes from taxing the higher salaries, the higher capital gains and the higher profits that a bubble generates can make a spendthrift government look frugal, and a careless government look wise. To be told that all this is based on a mirage, well . . .

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Something woke this way comes

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Man’s refusal to accept reality can take entertainingly paradoxical form. One of the more enjoyable is the New Atheists’ crusade (I use the term advisedly) against God — a battle with human nature which, like most battles with human nature, can never be won. God may never have appeared in a burning bush, but, he, she or they came to life in the brains of some ancient hominids, probably as a bug in a new pattern-recognition app. It was a bug with benefits, and as evolution is an opportunist, God has never gone away since.

Tara Isabella Burton, who has a doctorate in theology, does not deal with the sources of religious belief in Strange Rites, Instead, she focuses ‘primarily on what a religion does’. She defines religion as satisfying ‘four elements of human need… meaning, purpose, community and ritual’, then explores how these needs might be met in our era of ‘spiritual, but not religious’. Her underlying assumption, familiar from sermons down the ages, is that we are all on a ‘quest for knowing, and for meaning: the pilgrimage none of us can get out of’, a long walk that, mercifully, I dodged. And so the jump in the number of Nones, the ‘religiously unaffiliated’, represents a recasting of the American religious landscape, not its decay.

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Vera Lynn, R.I.P.

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There are moments when a connection between the past and the present, fraying for decades, finally snaps. As a child in Britain in the late 1960s, I remember the old men from the Western Front marching past the Cenotaph, the survivors of Ypres, Passchendaele, and all the other killing fields. As the years passed, their ranks thinned, then dwindled to a handful in their wheelchairs. Then there was no one.

Sadly, another fading of the guard is well underway, as the veterans of the Second World War march into their nineties and beyond. On Thursday, Vera Lynn, Britain’s “forces’ sweetheart,” died at the age of 103. For Brits, she was the last great living symbol of “the war,” as so often it is still referred to, a conflict that needs no other identifier, a reflection of the grip it still has on the British psyche — for good, or some say, ill.

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Profit without Honor

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The socially responsible investing (SRI) bandwagon rolls on.

CNBC:

Longtime hedge fund manager Paul Tudor Jones on Wednesday critiqued the long-held belief that companies should exist for the sole purpose of generating profits.

Jones, whose remarks came during a JUST Capital event with CNBC’s Andrew Ross Sorkin, said [that it’s] a philosophy that allows corporate boards to neglect issues of equity in the workplace and ultimately undermine the stability of broader U.S. society.

“When you just look and say that the only thing that a company has to worry about is making a profit, it gives that company a pass not to pay attention to pay equity, not to pay attention to gender equity, not to pay attention to racial equality. Not to pay attention to a whole host of social factors that at the end of the day are the basis and the foundation of a strong, vibrant society,” Jones said.

But these are matters best hashed out in public debate and where necessary, legislatures, not boardrooms.

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Three on the Third Reich: High-Speed History

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On Dec. 14, 1932,Germany’s head of state, President Paul von Hindenburg, a former general, a Prussian’s Prussian, hosted a party in honor of Ernst Lubitsch, a German Jew who had emerged as one of Hollywood’s finest directors. As two German writers, Rüdiger Barth and Hauke Friederichs, relate in “The Last Winter of the Weimar Republic,” another guest asked Lubitsch why he no longer worked in Germany. “That’s finished,” he replied, “nothing good is going to happen here for a long time.” Less than two months later, von Hindenburg appointed Adolf Hitler Germany’s chancellor.

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The Protests Are a Preview of Our Turbulent Future

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That the killing of George Floyd would produce both terrible sadness and deep anger was to be expected, and so was a wave of protest. That protest might sometimes degenerate into riot and looting could also, perhaps, have been expected, but the scale of the protests — and of what came next — well, almost certainly not. Part of the explanation lies in double repetition: another killing, replayed again and again, feeding the despair and fueling the rage from cell phone to news bulletin and onto the web.

And yet something else seems to be happening, something that suggests these events are a harbinger of even more serious upheavals in the years ahead. These upheavals will not be averted by justice being done in Floyd’s case, or by reforms in policing, however overdue they may be. And these upheavals (which may or may not be violent) will be “about” a lot more than race. To understand why, it’s necessary to appreciate that the protests over Floyd’s death were both a sincerely felt reaction to an appalling incident (that was itself emblematic of far deeper problems in both policing and race relations), and another round in a broader social and generational fight

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Germany’s Constitutional Court Accelerates the Euro Zone’s Slide toward Crisis

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One of the reasons that the euro zone has survived for as long as it has is the impressive ability of its leaders to postpone dealing with a series of questions that are as fundamental as they are inconvenient. Is it possible to sustain a monetary union without a fiscal union? (Probably not.) Is it possible to establish a fiscal union without genuine democratic consent? (We may yet find out.) And suddenly pressing: What is the relationship between the EU’s law and Germany’s?

For half a century the conflict hinted at by this last question could mostly be treated as theoretical. Then, last week, the German constitutional court (BVG) challenged the legality of the Public Sector Purchase Program (PSPP), the $2 trillion-and-counting quantitative-easing scheme first launched by the European Central Bank (the ECB) in 2015 to prop up the euro zone’s faltering economies, and restarted in 2019. The BVG’s ruling does not concern the ECB’s Pandemic Emergency Purchase Program (PEPP), a new, smaller quantitative-easing regimen under which the ECB will buy up to €750 billion in bonds to help stave off the effects of the mess that COVID-19 has left in its wake. But it may affect how the PEPP is run: Already widely considered inadequate for the task that lies ahead, the program may be hobbled by restrictions flowing from the BVG’s judgment, and that’s before another wave of German litigation tries to bring it down.

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How Advocates of ‘Corporate Social Responsibility’ Distort Shareholder Power

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Many years ago, Milton Friedman explained something that should never have needed explaining, when, writing for the New York Times Magazine, he reminded his readers what —and whom — a company is meant to be for:

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to [the] basic rules of . . . society, both those embodied in law and those embodied in ethical custom. . . .

What does it mean to say that the corporate executive has a “social responsibility” in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers.

The executives who retool a company’s mission to suit a particular conception of “social responsibility” are spending shareholders’ money on a moral agenda unrelated to company objectives, an affront that’s only made worse if their crusade depresses returns, share price, or both.

Friedman was writing in 1971. Since then, like so many bad ideas, corporate social responsibility has become institutionalized. To take a recent example, in 2017 JP Morgan Chase gave $500,000 to the Southern Poverty Law Center, an organization that, sadly, has strayed far from its original ideals. Had they learned of it, this gift would probably have irritated a good many shareholders. The employee who had to justify it was — you guessed it — the bank’s “head of corporate responsibility,” a title that signifies how deep the rot has gone.

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