Links to Consider, 7/29

Theodore Dalrymple on non-proportional representation; Allison Schrager on the private equity bubble; Peter Zeihan on American political upheaval; The Peterson Institute on the Budget

Theodore Dalrymple writes,

Labour won 63 percent of the seats, while the Reform Party, led by Nigel Farage, with 14 percent of the votes, won 5 seats. This means that a vote for Labour was worth, in terms of representation in parliament, thirty-six times that for Reform. Alternatively, if Labour had been required to garner as many votes as the Reform Party per member of parliament, it would have won 12 seats instead of 412.

Similarly, in France, the far-right party had a much lower seats/vote ratio than the left-wing coalition. This is not conducive to the public buying into the electoral outcome.

Allison Schrager writes,

Now it seems many funds lost money. The LPs, counting on those phantom returns all these years, will be disappointed when they finally are paid out—or never paid out. Many pension funds and endowments already are in trouble. Their money is locked up in “zombie funds” that will never pay off. Not a good sign.

…I blame public pension accounting—it always comes down to that. It violates the basic principles of finance by discounting liabilities at the expected rate of return of the invested assets. It makes no sense and creates an incentive for pensions to chase illiquid investments that promise high returns, which are not realized until decades later, while ignoring risk. This created a significant distortion, and now we are paying the price.

Moses Sternstein has been pointing out the weakness in private equity for quite a while, but without the public pension angle.

In a podcast, Peter Zeihan says,

what we think of as Democrats and Republicans have already irreversibly changed they just haven't settled on what their new form is going to be

…if you look back to the Trump Administration or you look today at the Biden Administration and you're wondering what the hell is going on with economic policy well there isn't one because the people who can do math are not in the room and that is going to be a problem until this all settles out

…in times when the American political system is unsettled like it is today it's hard to build in consensus on anything domestically and we tend to ignore everything internationally

Worth a listen.

News from the Peterson Foundation.

The Peterson Foundation asked experts from seven leading organizations — the American Action Forum, the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, the Manhattan Institute, and the Progressive Policy Institute — to develop specific policy proposals and recommendations to address our fiscal situation and meet their policy priorities over the next 30 years. 

All seven organizations — through a combination of spending cuts and revenue increases — successfully put our debt on a sustainable path.

But the politicians are not listening. We need Javier Milei.

substacks referenced above:

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If a non-market price falls in value does it make a sound?