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Readers’ Responses to "Investing and Politics Don't Mix Well”

David R. Kotok
Thu Jun 9, 2022

A number of readers responded to our Sunday, May 29, commentary, “Investing and Politics Don’t Mix Well” (  We appreciate the discussion and will quote from selected responses below. 

Marc wrote,
In short: The rule of law which we (mostly) follow in the US system better and more consistently than most other places, has been one of America’s primary economic competitive advantages vs other countries.  It has driven outsized amounts of:

- Innovation (rule of law means you have a predictable chance to monetize your innovations)

- Foreign direct investment (rule of law means your investment won’t be confiscated, nationalized or handed to cronies)
It’s part of how we fund our debt, fund public and private investment at scale, and maintain the dollar as a premium reserve currency.  All of that funds our way of life, and our freedom to squabble with each other about it. We risk it at our own peril.
Another thing which makes our country and our system of politics and laws special: Other systems prioritize OUTCOMES. Our system based on checks, balances and rule of law, prioritizes PROCESS. We all follow the process because you never know which side of a decision you might be on tomorrow.  One can look to places like Lebanon, which prioritize only outcomes - one winds up with winner take all tribalism under the fig leaf of process. The results are tragically predictable.

Fred offered further historical background:
Actually, the rights and powers of kings under the law of England when William conquered England are much more confusing.  
William had perpetual duties to his lesser lords that came with him from France under the code of chivalry (that code supported his ability to designate successors that would also have the continuing obligations). He learned that England had the code of comitatus which allowed William to arrange to sever those duties to lesser lords who came with him, but required each successor to restate their duties to all lesser lords (often as a condition to coronation).   
Comitatus came from Anglo-Saxon history, e. g., Beowulf. 
William and his successors “of course” wanted the best of both worlds and eventually both his French and British lesser lords got “po’d” at the arrogance and confusion. They periodically refused to allow Billy’s successors to be bullies. They forced the conqueror’s successors to a series of compacts, the most advancing of which was the Magna Carta, because it made “common law” (a concept in comitatus but not in chivalry) the overriding law. A concept is then periodically ignored by authoritarians with great regularity for the next 800 years. 
The confusion continues in arguments over the EU and Brexit and plays out every day in ordinary lives. 
Jay wrote,
I am amazed and disheartened in the way legal obligations are tossed out. We just need to look at the Supreme Court decision on Roe v Wade made 50 years ago. Why should an issue that was decided by the highest authority in our nation be overturned due to a political point of view? I can cite many examples. Just one more. The nuclear deal reached under the Obama administration and tossed out by Trump for political purposes. Why should the world trust us? Biden is doing a superb job in Ukraine. Will the next administration continue? What is happening to our values? Sensible gun control? I am a gun owner and hunter, but I don't need a military weapon such as an AR-15. Nobody does. Times have changed and we don't need a militia any longer.
I wrote to Ted Cruz and received a disappointing response that basically said he was not my Senator and doesn't represent me and I should express my views to my elected representatives. I wrote back that he was a US, underscored, legislator and that while I didn't have a vote in Texas, I can still vote with my wallet. 
Lindsey responded,
For me the real concern is how pervasive the extreme political views have taken hold. Since retiring 5 years ago I've spent a significant amount of my time in educational outreach, and I'm very disturbed by how extreme views are on display by many in the educational community. Major concern!
Harry raised the question of Las Vegas visitors who aren’t convention-goers:
Excellent article.

One small point. You compared Magic Kingdom total visitors to Vegas convention visitors. Vegas has many non-convention visitors.

[Kotok – Harry, you have an interesting point. Total visitors to Las Vegas in 2019 numbered about 42 million. After the pandemic hit in 2020, tourism nosedived; but 32 million visitors spent time in Vegas in 2021. So more people do visit the Las Vegas area over the course of a year than visit the Magic Kingdom, which had 21 million visitors in 2021. But some 69 million people visited the Orlando area last year (down from about 76 million in 2019). Orlando welcomes more visitors each year than any other US city does, and Disney gets significant credit for that achievement. See “Tourism Board Charts Upswing of Las Vegas Visitor Diversity,”, and “How Disney World Helped Orlando Become Nation’s Most Visited City,”]
Paul broadened the discussion:
This is a clear issue, but there are bigger challenges.
Should your bank finance fossil fuel exploration or the manufacture of firearms? Shareholders with an ESG approach say the bank should not. States such as Texas say the bank cannot do business with state agencies, such as pension funds or underwrite municipal bonds, if they have ESG policies discriminating against these industries.
I disagree with you and Barry. If you are a shareholder, you are an owner. You should know what the company does and decide if you are OK with it.  
Issues such as gun control and climate change should not be politicized. But they are.  
Gary concurred:
I could not agree more. As I once stated to a friend who was a County Chairmen of one of our political parties, “Our system has become nothing more than legalized corruption not much better than some lesser countries; we just justify it with questionable legal constraints.”
Ray wrote,
As for that wonderful quote, it’s a mere hop and a skip from the “quippiest guy I know” - Mark Twain, but he used the word government instead of politician. I personally used to believe self-serving politicians were a distinct minority, say 10% of our representatives; now, given all the animosities and polarization, I’m inclined to push that to 50.5%. How about you?  Maybe it’s the squeaky wheel scenario?
Frank noted,
I suspect Warren was either jumping on a bandwagon or using a bully pulpit.  If you have money, you can already avoid overdraft fees at Capital One, TIAA, and some Chase accounts, also several others. If you don't have money, you are probably S.O.L. It's just like the 10.2% sales tax in Seattle. If you have money, it’s no problem; if you’re dirt poor, it's a very large amount of your resources. Doubt seriously that banks would take a serious hit from not charging overdraft fees, they can just freeze the account until the overdraft is corrected.
As to Disney, do you think anyone in Florida will object to taking on a mere billion in debt? Or that Disney will protest and say, “Let us pay what we owe”?
When only the taxpayer gets screwed, for such a “small amount,” all the big guys benefit in one way or another. DeSantis gets to pound his chest and preen, and Disney gets a billion-dollar gift from the state. What could possibly be bad about that? (Unless you have to pay for it!)

Judges have never had a great track record for impartiality when it comes to interpreting what the law says. There are hanging judges and lenient ones all over, and lawyers who go to court and some local news reporters know who they are, on both sides. And when the Supremes swear to follow the law, they know that for the last 250 years what that really means is they will interpret what the law means using their own bifocals. The principle is, “I know you believe you understand what the law says, but what you have been reading is not what it means.”

But then again, you may be right.  And I enjoyed reading and thinking about what you wrote today.
Another Ray enjoyed the historical note, quoting from the commentary:
A quick read finds many insights, but a second read provides food for thought and an appreciation of our way of life.
"One thousand years after Battle of Hastings, a d’Isigny family descendant named Walt Disney pioneered a theme park in Orlando. All payments on the financing for that project have been made since the beginning and without overdrawing bank accounts.
“Long-term investors have been very successful because of the development of English law and adjudication of contracts and disputes. That success has involved the defense of business agreements using a system of courts and judges that are supposed to be impartial.”
Wow, what a terrific lesson in history with a side of genealogy and a reminder about the critical importance of the rule of law! Keep ’em coming, please.

Readers, you keep ’em coming, too. We value civil and reasoned dialogue. Thanks to all who responded. 


David R. Kotok
Chairman & Chief Investment Officer
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