Smart Links 25 February 2012

Commentary on investing, the line between religion and the civil code, the fight for the soul of the GOP, the dangers lurking in the bond market, the split personality of economics, and Harpergate.

Uber-investor Jeremy Grantham’s long essay on getting through the next decade alive. Thanks to David of Victoria.

Pdf below – The Longest Quarterly Letter Ever


Advisor One -- Breaking Ranks: Former Broker Turns Bomb Thrower
Joshua Brown is a reformed broker and thinks you should be one too­ — or else.


Pdf below – How Unrealistic Optimism is Maintained in the Face of Reality

Where will the line be drawn? Religion and the civil code.

New York Times -- Theocracy and Its Discontents
Ah, the founders, those starch-collared English souls planting liberty in the Massachusetts Bay Colony in the 17th century.

Quote worth quoting.

“But most Americans also will part ways with him when he advocates that civil code should adhere to his religious beliefs.”


The Atlantic -- Symbolic Legislation to Nowhere: Why Statehouses Fail in Governance
Virginia's attempt to intrude (literally and figuratively) upon the privacy of its pregnant women would be bad enough if it were merely a rare example of state lawmakers unhinging proposed legislation from law, science, and sense.

The battle for the GOP.

Financial Times -- The new battle for the old soul of the Republican party
In a debate on Wednesday, former Massachusetts governor Mitt Romney bested former Pennsylvania senator Rick Santorum, who has emerged as Mr Romney’s most serious challenger for the Republican presidential nomination. Mr Santorum stammered timidly while Mr Romney voiced one half-truth after another, to the delight of his claque in the audience.

Has the ECB planted another bomb in the bond market?

Telegraph -- ECB's Mario Draghi magic corrupts bond markets
The European Central Bank's blitz of measures to stave off a credit crunch and shore up EMU states are profoundly distorting debt markets and may ultimately do more harm than good.

Economics splits again. (ed’s note – the problem economics has is thinking that it is a science and that there is one right way).

voxec -- The return of schools of thought in macroeconomics
Just five years ago, macroeconomists talked about a new synthesis, bringing together Keynesian and Classical ideas in a unified, microfounded theoretical framework. Following the Great Recession, it appears that mainstream macroeconomics has once again split into schools of thought.

Harpergate? (ed’s note -- interesting that a leader that prides himself on complete control of his party’s political outcomes ‘didn’t know’).

National Post -- All too plausible to think the Conservatives are involved in the robocall scandal
Here is a list of some of the things we do not know about the Robocon scandal.

The Longest Quarterly Letter Ever.pdf1.72 MB
How Unrealistic Optimism Is Maintained in the Face of Reality.pdf500.8 KB
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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.