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The Digest #157

Munger on windowless dorms, Damodaran on country risk, Disney’s brand, Working without working, The comfort crisis, Fairfax, Markel, Vision Pro’s breakthrough,…

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For more on Mortimer J. Adler:

Articles

Charlie Munger Q&A Transcript at the 2020 Redlands Forum by Kingswell, July 25, 2023. This is a transcript of a Charlie Munger interview that took place in January 2020. Part of the discussion involved the dormitory project at U.C. Santa Barbara that became controversial because of the windowless bedroom design. However, the upside was a private sleeping area for each student! “It takes twenty extra square feet of space under the building code that binds the UC system. Twenty extra square feet to give a student his own private sleeping area. Twenty extra square feet. Can you think of anything dumber than building housing that’s going to last 200 years when you force a whole bunch of unrelated people to live together and throw up on one another and God knows what, to save twenty extra square feet? It’s insane. So I gave every student his own room.” (Kingswell)

The Return on Hassle Spectrum by Nick Maggiulli, July 25, 2023. This article is a response to a controversy on Twitter about a couple seeking financial independence through active ownership of rental housing. The essential point is that investment options must be viewed not only in terms of expected return but in terms of the time commitment and hassle factor involved in the activity. In my opinion, actively managing rental housing must be regarded as a full-fledged business. The same is true for actively managing a stock portfolio. I think that this article presents the pros and cons of various types of investments well. (Of Dollars and Data)

Country Risk: A July 2023 Update by Aswath Damodaran, July 26, 2023. “I have looked at country risk, in all its dimensions, towards the middle of each year, for the last decade, for many reasons. One is curiosity, as political and economic crises roll through regions of the world, roiling long-held beliefs about safe and risky countries. The other is pragmatic, since it is almost impossible to value a company or business, without a clear sense of how risk exposure varies across the world, since for many companies, either the inputs to  or their production processes are in foreign markets or the output is outside domestic markets.” (Musings on Markets)

The Psychology of Disneyland by Trung Phan, July 22, 2023. A compilation of thoughts and observations on Disneyland after a weekend at the park with a five year old. “We waited in long lines. We got scorched by the sun (I didn’t do us any favours by being hungover). We bought overpriced bottles of water and random swag (hello, Misting Spray Fan for $30). And I legit chuckled every time a Disney employee rang up a bill, as I did the gross margin calculation in my head (the margins are the opposite of low). You know what, though? My memories of Disneyland since then have been incredibly positive and we plan on going back. The ‘Happiest Place on Earth’ got me. It got me!” (SatPost by Trung Phan)

Working Without Working: The Creative Night Shift by Frederik Gieschen, July 22, 2023. Sometimes, work does not “look” like work. “As I navigate the trail, my mind starts wandering. Fragments of memories and ideas trail through my consciousness against a backdrop of weather-beaten trees and endless sky. Suddenly, I stop and pull out my phone to record a voice note. The walk has yielded a first creative spark. Ideas start flowing. I didn’t plan it this way, but I’m not surprised either. Walking without distractions (no music, no podcasts, no audio books, no calls) has become one of my staple practices in surfacing answers and ideas. It’s part of my rhythm of input, processing, and output.” (Neckar Substack)

The Misuse of ‘Equity’ by Roger Lowenstein, July 25, 2023. If I was Xi Jinping, I would be laughing at the idiocy that seems to plague many public school systems in America. “Prior to the pandemic, Cambridge stopped offering advanced math in grades six through eight. Its explicit aim was to reduce disparities between low-income Blacks and Hispanics (who were under-represented in such classes) and whites and Asians. The policy, according to subsequent state test scores, has done nothing for children of color. But it has done something to students who might have benefitted from algebra.” (Intrinsic Value)

The Comfort Crisis by Mr. Money Mustache, July 23, 2023. Too much comfort can backfire. “My work days in that high desert environment in the peak of summer were hot and physically demanding. It was hard to keep my tools, and my food supply in the cooler, and myself protected from the scorching sun … while still getting the job done. There was no indoor plumbing and we had to be very careful with our limited water supply. And then at the end of each day I had to reshuffle everything and set my car back up as a bedroom and crawl in for the night. Alone and far from home. But instead of feeling depressed as I experienced this constant hardship, the opposite thing was happening: I felt more alive and more badass with each passing day. I got better at being a feral forest man.” (Mr. Money Mustache)

Aeropagus Newsletter by The Cultural Tutor. Every Friday, a newsletter arrives in my inbox that requires about a half hour to appreciate, so I typically save it for Saturday afternoon. I rarely regret the time investment. Each issue is divided into seven parts featuring art, classical music, a historical figure, architecture, rhetoric, writing, and anecdotes. This link is to the archive. The newsletter is free. (The Cultural Tutor)


Podcasts

Fairfax is a “Fat Pitch”, July 20, 2023. 1 hour, 23 minutes. Charles Frischer and Asheef Lalani discuss Fairfax Financial with Bill Brewster. Prem Watsa, Chairman and CEO of Fairfax Financial Holdings, has been referred to as “Canada’s Warren Buffett” and his company is often regarded as a “mini Berkshire”. The guests on this podcast are very bullish on the company. I have not followed Fairfax in many years but I did find the discussion on reserving particularly interesting. (The Business Brew)

Tom Gayner, how are you building Markel? A CEO Interview. July 19, 2023. 56 minutes. This is an interesting discussion ranging from describing markets through music, Markel’s business model, and the stock’s valuation. (Good Investing Talks)

The Passionate Pursuit of Lifelong Learning w/Gautam Baid, July 20, 2023. 1 hour, 5 minutes. This is a great story about persistence and determination. Gautam Baid faced a great deal of rejection at the start of his career but never gave up. He applied for over a thousand investing jobs while working the graveyard shift at a hotel. Today he is a successful fund manager specializing in Indian stocks. (The Investors Podcast)

Chris Paik – Venture Investing Frameworks, July 25, 2023. 1 hour, 30 minutes. The discussion regarding how Apple’s VisionPro represents a fundamental step change in the human/computer interface is very interesting“With eye-tracking, you basically get to short-circuit that entire lossy physical loop. I feel like that’s why you hear from early users, it feels telepathic. It’s such a gain of efficiency of human write speed to the computer. I think the hope is that continued advancement of human write speeds to computers lead to these watershed moments of advances in human-computer interfaces.” (Invest Like the Best)


Tweets

Nassim Taleb brings up an excellent point about human nature. Nearly everyone is concerned about how they are perceived by others. While it is a mistake to care about what everyone might think of you, it is equally mistaken to not care what anyone thinks of you. This is the central point of my recent article, The Limits of an Inner Scorecard.

Sahil Bloom suggests a iPhone hack that actually works. Apple strives to make the iPhone more appealing and humans are suckers when it comes to colorful displays. Grayscale makes the display drab and unappealing which results in less use. Click through to Sahil’s tweet for a way to easily toggle between color and grayscale modes.

Lawrence Yeo is the talented artist and writer behind the More to That. He has a way of creating powerful illustrations like the one in this tweet. Happiness is indeed the difference between what you have and what you consider to be “enough”. The problem is that the dashed horizontal line representing “enough” keeps shifting upward for the majority of people due to peer pressure and the hedonic treadmill.


Tony Bennett and Dave Brubeck (1962)

Tony Bennett died on July 26 at the age of 96. I recommend reading A Tribute to Tony Bennett  by Ted Gioia as well as his compilation of a dozen jazz collaborations. If you only listen to one of the recommendations, I suggest this collaboration with the great Dave Brubeck recorded in 1962.

“On August 28, 1962, both Bennett and Dave Brubeck were booked to play the Sylvan Theater on the grounds of the Washington Monument. Each artist performed separately and then they decided to attempt some songs together—without any rehearsal or much planning.”


Photo of the Week

Continental Divide Trail, Colorado, August 12, 2014

Copyright, Disclosures, and Privacy Information

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Government

Chinese migration to US is nothing new – but the reasons for recent surge at Southern border are

A gloomier economic outlook in China and tightening state control have combined with the influence of social media in encouraging migration.

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Chinese migrants wait for a boat after having walked across the Darien Gap from Colombia to Panama. AP Photo/Natacha Pisarenko

The brief closure of the Darien Gap – a perilous 66-mile jungle journey linking South American and Central America – in February 2024 temporarily halted one of the Western Hemisphere’s busiest migration routes. It also highlighted its importance to a small but growing group of people that depend on that pass to make it to the U.S.: Chinese migrants.

While a record 2.5 million migrants were detained at the United States’ southwestern land border in 2023, only about 37,000 were from China.

I’m a scholar of migration and China. What I find most remarkable in these figures is the speed with which the number of Chinese migrants is growing. Nearly 10 times as many Chinese migrants crossed the southern border in 2023 as in 2022. In December 2023 alone, U.S. Border Patrol officials reported encounters with about 6,000 Chinese migrants, in contrast to the 900 they reported a year earlier in December 2022.

The dramatic uptick is the result of a confluence of factors that range from a slowing Chinese economy and tightening political control by President Xi Jinping to the easy access to online information on Chinese social media about how to make the trip.

Middle-class migrants

Journalists reporting from the border have generalized that Chinese migrants come largely from the self-employed middle class. They are not rich enough to use education or work opportunities as a means of entry, but they can afford to fly across the world.

According to a report from Reuters, in many cases those attempting to make the crossing are small-business owners who saw irreparable damage to their primary or sole source of income due to China’s “zero COVID” policies. The migrants are women, men and, in some cases, children accompanying parents from all over China.

Chinese nationals have long made the journey to the United States seeking economic opportunity or political freedom. Based on recent media interviews with migrants coming by way of South America and the U.S.’s southern border, the increase in numbers seems driven by two factors.

First, the most common path for immigration for Chinese nationals is through a student visa or H1-B visa for skilled workers. But travel restrictions during the early months of the pandemic temporarily stalled migration from China. Immigrant visas are out of reach for many Chinese nationals without family or vocation-based preferences, and tourist visas require a personal interview with a U.S. consulate to gauge the likelihood of the traveler returning to China.

Social media tutorials

Second, with the legal routes for immigration difficult to follow, social media accounts have outlined alternatives for Chinese who feel an urgent need to emigrate. Accounts on Douyin, the TikTok clone available in mainland China, document locations open for visa-free travel by Chinese passport holders. On TikTok itself, migrants could find information on where to cross the border, as well as information about transportation and smugglers, commonly known as “snakeheads,” who are experienced with bringing migrants on the journey north.

With virtual private networks, immigrants can also gather information from U.S. apps such as X, YouTube, Facebook and other sites that are otherwise blocked by Chinese censors.

Inspired by social media posts that both offer practical guides and celebrate the journey, thousands of Chinese migrants have been flying to Ecuador, which allows visa-free travel for Chinese citizens, and then making their way over land to the U.S.-Mexican border.

This journey involves trekking through the Darien Gap, which despite its notoriety as a dangerous crossing has become an increasingly common route for migrants from Venezuela, Colombia and all over the world.

In addition to information about crossing the Darien Gap, these social media posts highlight the best places to cross the border. This has led to a large share of Chinese asylum seekers following the same path to Mexico’s Baja California to cross the border near San Diego.

Chinese migration to US is nothing new

The rapid increase in numbers and the ease of accessing information via social media on their smartphones are new innovations. But there is a longer history of Chinese migration to the U.S. over the southern border – and at the hands of smugglers.

From 1882 to 1943, the United States banned all immigration by male Chinese laborers and most Chinese women. A combination of economic competition and racist concerns about Chinese culture and assimilability ensured that the Chinese would be the first ethnic group to enter the United States illegally.

With legal options for arrival eliminated, some Chinese migrants took advantage of the relative ease of movement between the U.S. and Mexico during those years. While some migrants adopted Mexican names and spoke enough Spanish to pass as migrant workers, others used borrowed identities or paperwork from Chinese people with a right of entry, like U.S.-born citizens. Similarly to what we are seeing today, it was middle- and working-class Chinese who more frequently turned to illegal means. Those with money and education were able to circumvent the law by arriving as students or members of the merchant class, both exceptions to the exclusion law.

Though these Chinese exclusion laws officially ended in 1943, restrictions on migration from Asia continued until Congress revised U.S. immigration law in the Hart-Celler Act in 1965. New priorities for immigrant visas that stressed vocational skills as well as family reunification, alongside then Chinese leader Deng Xiaoping’s policies of “reform and opening,” helped many Chinese migrants make their way legally to the U.S. in the 1980s and 1990s.

Even after the restrictive immigration laws ended, Chinese migrants without the education or family connections often needed for U.S. visas continued to take dangerous routes with the help of “snakeheads.”

One notorious incident occurred in 1993, when a ship called the Golden Venture ran aground near New York, resulting in the drowning deaths of 10 Chinese migrants and the arrest and conviction of the snakeheads attempting to smuggle hundreds of Chinese migrants into the United States.

Existing tensions

Though there is plenty of precedent for Chinese migrants arriving without documentation, Chinese asylum seekers have better odds of success than many of the other migrants making the dangerous journey north.

An estimated 55% of Chinese asylum seekers are successful in making their claims, often citing political oppression and lack of religious freedom in China as motivations. By contrast, only 29% of Venezuelans seeking asylum in the U.S. have their claim granted, and the number is even lower for Colombians, at 19%.

The new halt on the migratory highway from the south has affected thousands of new migrants seeking refuge in the U.S. But the mix of push factors from their home country and encouragement on social media means that Chinese migrants will continue to seek routes to America.

And with both migration and the perceived threat from China likely to be features of the upcoming U.S. election, there is a risk that increased Chinese migration could become politicized, leaning further into existing tensions between Washington and Beijing.

Meredith Oyen does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Government

Is the National Guard a solution to school violence?

School board members in one Massachusetts district have called for the National Guard to address student misbehavior. Does their request have merit? A…

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Every now and then, an elected official will suggest bringing in the National Guard to deal with violence that seems out of control.

A city council member in Washington suggested doing so in 2023 to combat the city’s rising violence. So did a Pennsylvania representative concerned about violence in Philadelphia in 2022.

In February 2024, officials in Massachusetts requested the National Guard be deployed to a more unexpected location – to a high school.

Brockton High School has been struggling with student fights, drug use and disrespect toward staff. One school staffer said she was trampled by a crowd rushing to see a fight. Many teachers call in sick to work each day, leaving the school understaffed.

As a researcher who studies school discipline, I know Brockton’s situation is part of a national trend of principals and teachers who have been struggling to deal with perceived increases in student misbehavior since the pandemic.

A review of how the National Guard has been deployed to schools in the past shows the guard can provide service to schools in cases of exceptional need. Yet, doing so does not always end well.

How have schools used the National Guard before?

In 1957, the National Guard blocked nine Black students’ attempts to desegregate Central High School in Little Rock, Arkansas. While the governor claimed this was for safety, the National Guard effectively delayed desegregation of the school – as did the mobs of white individuals outside. Ironically, weeks later, the National Guard and the U.S. Army would enforce integration and the safety of the “Little Rock Nine” on orders from President Dwight Eisenhower.

Three men from the mob around Little Rock’s Central High School are driven from the area at bayonet-point by soldiers of the 101st Airborne Division on Sept. 25, 1957. The presence of the troops permitted the nine Black students to enter the school with only minor background incidents. Bettmann via Getty Images

One of the most tragic cases of the National Guard in an educational setting came in 1970 at Kent State University. The National Guard was brought to campus to respond to protests over American involvement in the Vietnam War. The guardsmen fatally shot four students.

In 2012, then-Sen. Barbara Boxer, a Democrat from California, proposed funding to use the National Guard to provide school security in the wake of the Sandy Hook school shooting. The bill was not passed.

More recently, the National Guard filled teacher shortages in New Mexico’s K-12 schools during the quarantines and sickness of the pandemic. While the idea did not catch on nationally, teachers and school personnel in New Mexico generally reported positive experiences.

Can the National Guard address school discipline?

The National Guard’s mission includes responding to domestic emergencies. Members of the guard are part-time service members who maintain civilian lives. Some are students themselves in colleges and universities. Does this mission and training position the National Guard to respond to incidents of student misbehavior and school violence?

On the one hand, New Mexico’s pandemic experience shows the National Guard could be a stopgap to staffing shortages in unusual circumstances. Similarly, the guards’ eventual role in ensuring student safety during school desegregation in Arkansas demonstrates their potential to address exceptional cases in schools, such as racially motivated mob violence. And, of course, many schools have had military personnel teaching and mentoring through Junior ROTC programs for years.

Those seeking to bring the National Guard to Brockton High School have made similar arguments. They note that staffing shortages have contributed to behavior problems.

One school board member stated: “I know that the first thought that comes to mind when you hear ‘National Guard’ is uniform and arms, and that’s not the case. They’re people like us. They’re educated. They’re trained, and we just need their assistance right now. … We need more staff to support our staff and help the students learn (and) have a safe environment.”

Yet, there are reasons to question whether calls for the National Guard are the best way to address school misconduct and behavior. First, the National Guard is a temporary measure that does little to address the underlying causes of student misbehavior and school violence.

Research has shown that students benefit from effective teaching, meaningful and sustained relationships with school personnel and positive school environments. Such educative and supportive environments have been linked to safer schools. National Guard members are not trained as educators or counselors and, as a temporary measure, would not remain in the school to establish durable relationships with students.

What is more, a military presence – particularly if uniformed or armed – may make students feel less welcome at school or escalate situations.

Schools have already seen an increase in militarization. For example, school police departments have gone so far as to acquire grenade launchers and mine-resistant armored vehicles.

Research has found that school police make students more likely to be suspended and to be arrested. Similarly, while a National Guard presence may address misbehavior temporarily, their presence could similarly result in students experiencing punitive or exclusionary responses to behavior.

Students deserve a solution other than the guard

School violence and disruptions are serious problems that can harm students. Unfortunately, schools and educators have increasingly viewed student misbehavior as a problem to be dealt with through suspensions and police involvement.

A number of people – from the NAACP to the local mayor and other members of the school board – have criticized Brockton’s request for the National Guard. Governor Maura Healey has said she will not deploy the guard to the school.

However, the case of Brockton High School points to real needs. Educators there, like in other schools nationally, are facing a tough situation and perceive a lack of support and resources.

Many schools need more teachers and staff. Students need access to mentors and counselors. With these resources, schools can better ensure educators are able to do their jobs without military intervention.

F. Chris Curran has received funding from the US Department of Justice, the Bureau of Justice Assistance, and the American Civil Liberties Union for work on school safety and discipline.

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International

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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