If you’re joining us late: my article in the current issue, about the Generation Investment Management firm of London, explained its potential as a test case for the “sustainability can be profitable!” hypothesis.
Over the past ten economically tumultuous years, the returns of this environmentally and social minded firm have beaten nearly all other investors. Thus Al Gore, Generation’s chairman, and his colleagues say that financial managers should give sustainability another look.
The counter-argument is: this can’t be right. If sustainability really were so lucrative, more people would be doing it already.
In counter to that, Gore et al say: in fact, more firms are taking this approach, and it is paying off. One recent indication, which I mentioned in my article, is the report from Oxford University and Arabesque partners about the growing popularity and profitability of a longer-term, socially minded investment strategy.
The Wharton study looked at 53 “impact investing” funds from the private equity world, and how both their financial returns and their social-responsibility “impact” measured up. This is an allied but different approach from Generation’s. (Generation’s main fund holds publicly traded corporate stocks, not private equity, and has its own definition of “sustainability.” But “impact investing” and “sustainable capitalism” are part of the same movement.)
Here’s what the study found:
A common critique of impact investing broadly is that investors must expect concessionary financial returns in exchange for pursuing a social or environmental impact… [JF note: ie, most people assume that social responsibility comes at a cost.]
WSII assessed the financial performance of the subset of funds seeking market-rate returns, assuming that the tension between financial performance and mission preservation would be most acute in this group… The data show that impact funds did not have to make concessions in order to preserve the portfolio companies’ missions upon exit. [Ie, as with Gore’s fund these funds have been able both to “do good” and to do well.]
The study goes on to explain its methodology and results and then concludes:
Market-rate-seeking impact investments in the sample, therefore, may be financially competitive on a gross basis with other equity investing investment opportunities. This financial performance may be why impact fund managers often assert that there is little inherent tension between profits and “purpose.”
In early responses to my article in the current issue about the surprisingly profitable track record of Al Gore’s Generation Investment Management firm, Felix Salmon and other commentators have given variants of what I’m calling the “$20 bill on the sidewalk” argument. The $20 argument goes: if an economics professor sees some money on the sidewalk, he thinks, That can’t really be a $20 bill, because if it were someone would already have picked it up. The analogue when viewing sustainable investment would be, This approach can’t really be so profitable, because if it were other people would already be doing it.
For this installment, a sample of responses that say: As a matter of fact, it is that profitable! And lots of other people have been doing it. And, even if Al Gore and David Blood didn’t “invent” this approach, perhaps their prominence and their recent success will help it become better known.
First and most extensive is a long report by Jim Cummings at the Resilient Investor site, which essentially says: Welcome aboard, Mr. Gore! And it’s about time! It’s worth reading in detail, but here is a sample:
Convincing quotes from [various experts I cite in the article] all seem to agree [that Generation’s profitability] flies in the face of conventional wisdom. Where have they been?
When we wrote Investing With Your Values in 1999 (published by Bloomberg, not exactly a fringe outfit), there was already a solid track record of clear parity and frequently out-performance by SRI funds; our own Jack Brill had completed a 5-year New York Times mock-management quarterly feature, running a strong second with the only SRI portfolio. Indeed, the co-authors of our new book were in the audience at the annual SRI Conference in 2005 when David Blood, who had recently launched Generation Investment Management with Gore, told the gathered crowd, “You were right. You’ve been right for 25 years. Incorporating social, environmental, and corporate governance considerations into the stock selection process adds value.”
We were happy to welcome Blood to the club in 2005, and we’re surely excited that Generation’s first ten years of results can be added to the steady stream of mainstream reports confirming and expanding on the message that socially and environmentally responsible firms outperform their values-neutral peers.
After the “welcome aboard!” joshing, Cummings goes on to emphasize why the Generation story might be significant:
But we don’t mean to dismiss the power of what Blood and Gore (!) have accomplished. In two ways, they are making a statement that few others are in the position to do. First, they’re showing that sustainable capitalism can do more than just slightly outperform the norm (which is impressive enough; over time, the increased returns really add up)….
Secondly, their target client audience is the extremely rich, with most of the assets they manage being held by institutional investors. Though most laymen aren’t aware of the fact, institutional investors (pension funds, universities, foundations) hold a large proportion of the world’s market equity. If capitalism really is going to evolve into a force for good, as argued by SRI pioneers John Fullerton and Hunter Lovins, then getting institutional investors and the uber-wealthy on board is going to be key.
I should clarify that, even more than I mentioned in the piece, everyone at Generation whom I interviewed stressed that they were part of a long tradition — but that they hoped that their recent results might add more oomph to an ongoing, international effort.
I’ve been following ethical investing for over forty years and independently founded Investing for the Soul in 2002 to help investors everywhere apply their personal values to investing. The site covers SR-ethical investing news and research from around the world, plus related insightful commentary and services for investors, investment professionals and organizations.
I believe that if everyone invests according to their personal values, then, since so many of our core values are alike—and are supportive of higher ideals—that in the long run, only companies employing these higher values will truly prosper.
In his note Felix Salmon asked if I had talked with any of Generation’s investors. The answer is yes, but none of those I spoke with wanted to be quoted by name. I have followed up with one of them, asking whether he would be willing to join the on-line discussion. He said:
I found Felix Salmon’s piece depressing for its being infused with a skepticism so severe it borders on denialism. You had already answered many of his objections in the main piece, thought he chose not to mind, and you dealt with the rest of them in your follow-up note. I have nothing to add.
And just to round this out on a “many readers, many perspectives” note, here is one more note from a person drawing the opposite inference:
I'm inclined to think well of Al Gore, and my reaction to hearing about his investment approach is "I hope he succeeds"! Reading the persuasive response by Felix Salmon pulls me back from this bias.
It's not the inherent contradiction of what Al Gore proposes (live sustainably and be rich!). It's the fallacy of his investment philosophy - that his firm will consistently pick winners. Yes, some seem to be able to do that, but for everyone who picks a winner, there is someone who picks a loser. Investment as practiced, or should I say "sold" by Al Gore is a zero-sum game. If I buy low and sell high, there is someone else selling low and buying high. For every firm that claims above average returns, there is a firm that has below average returns. And, an approach of picking winners leads to active trading and high expenses, reducing investment returns, but making the brokers rich.
Investing in companies that reflect your values is a good thing, but as I infer from Felix Salmon's commentary, there is nothing magical about it.
Following my article on the implications of the so-far-very-profitable “sustainable capitalism” approach of Al Gore’s Generation Investment firm in London, and the previous call-and-response you’ll see further down on this page, some more reader response.
First, from a veteran of the U.S. high tech industry who is now a professor in Israel:
Like Felix Salmon, I have an active BS detector that begins to buzz when the success of what is essentially a technical advance (usually something that I encounter in a popular treatment of an engineering breakthrough, like recent stories on i-phone sized cameras with 16 different lenses and imaging chips) is defended by one number and a lot of good intentions.
The Institutional Investor article which you link to leaves me feeling much better about the likelihood that Generation is really doing well for fundamentally sound reasons, and will have a broader impact. It does make the case that others are following similar directions.
A theme in these two articles which caught my interest is that European investors and governments take a broader, more philosophical approach to capitalism than does the US. (Leaving aside the London Whale and similar stories.)
In the world that I see, European support for research in science and technology, this is definitely true. The EU's programs, such as Horizon 2020, have broader boundaries, and their goals combine technical excellence with sustainability and industrial exploitation. "Welfare capitalism" is accepted, e.g. Airbus. In the US, the NSF and DARPA seem to care most about continuing US scientific and military dominance on steadily shrinking uncertain budgets. Perhaps each side of the Atlantic is still thinking in terms that have not changed much since the 1950s.
And from an American with extensive experience in big-project investments (and also environmental projects):
It is going to be a stretch just to get investors to put their money into things that are good for the world and also yield no more than the level of returns that the investors are otherwise accustomed to (especially at no greater than customary risk to the investors). In fact, it is also going to be quite difficult just to find such investment opportunities for them, and to structure them so that they actually are good for the world and also actually do yield even customary returns with customary levels of risk.
It may be possible to invest in things that are good for the world and also produce HIGHER than customary returns at no more than ordinary levels of investor risk. But people familiar with finance and investing will so skeptical of that proposition that even if Generation has indicated that it has already accomplished this (to some extent), the cognoscenti are likely to think: Really? To what extent, exactly? And how scalable/replicable is this – currently – even if Generation has actually accomplished it (to some extent).
Cut through Salmon’s screed, and those are essentially the questions he’s asking. A subsidiary set of questions, to which he also alludes, arises around how acting largely like a hedge fund buying and trading securities – not investing in projects directly, or in start-up companies – actually advances the “good for the world” cause.
On politics, from a reader in California:
I know that Mr. Gore has done a lot to bring the climate change issue to the fore and that with Current TV he promoted progressive ideas, but this Generation thing is a bit of a head-scratcher.
Here is a man who had built the mechanism and personal brand to influence tens of millions of Americans to take action (i.e., vote) on progressive ideas. One would think that he could have carved out a larger roll for himself being involved in the public discourse and getting people more active in politics.
But instead he chooses to get into investment management? Seriously? It seems that the guy he really admired was not Gandhi but Mitt Romney. And meanwhile, after building Bain, Mitt Romney longed to attain to the status and influence that already belonged to Al Gore as a trusted political voice and leader.
I can’t help but think that the 52 year old Gore could have used his energies much better than running after pension funds to play with their money and get returns that were 2-3% higher than average. Whooopde do. I wish he had instead worked in building coalitions to elect leaders that make a difference.
I have responses on many of these points but will save them for an upcoming round. For now, thanks to these and other readers. Again the point of my article was to try to get the “sustainable capitalism” concepts into broader discussion, and scrutiny, by the non-financial-pro part of the public. So responses pro and con all advance the cause.
The new issue has my piece on the Generation Investment Management firm co-founded more than a decade ago by Al Gore, and why Gore thinks its profitable track record can shift capitalist incentives in a pro-environmental direction. I hope you’ll read it, because I think the arguments Gore and colleagues are making bear directly on the “saving capitalism from itself” debate that has been running for years in Europe and which the Democratic candidates waded into during this week’s debate.
Yesterday I posted a long, largely skeptical response by the financial writer Felix Salmon, of Fusion. You’ll see it lower down on this page. Salmon had once looked into Generation himself, and he had questions about both the details of its operation and the significance of its example.
My purpose in this story is different from that of some others I’ve written. For instance, in the big Chickenhawk Nation piece I did in January, the narrative structure boiled down to: I’ve been wrestling with this topic for years, I’ve been reporting on it in recently, and now I have a line of argument. So sit back and let me see if I can convince you. Some other long stories, on fields I’ve dealt with for decades, follow that same structure (for instance this and this and this and this or this.)
Many other stories are in more straightforwardly reportorial mode. (The Atlantic is one of a handful of publications comfortable with both.)
For those stories the narrative structure boils down to: I heard about some new subject, I found out what I could, and now I am going to show and tell you what I’ve seen, which you may not have heard about before. Most of my reporting from China was in this second category, and so in this current story about Generation.
At face value, I find the Generation story an example very much worth taking seriously, on a subject of tremendous world-wide importance. And at a minimum I find very interesting. But my main ambition with this story was to move the “sustainable capitalism” argument closer toward the limelight of public attention and discussion, both by financial experts and by informed amateurs. Toward that end, even a note as querulous as Salmon’s helps the discussion.
Nothing that follows should be construed as an response from Al Gore, David Blood, Miguel Nogales, Mark Ferguson, or the other Generation co-founders I write about in the story. I haven’t spoken with any of them. These are my answers, based on things I learned during my reporting or inferences I make. Their intention is to put in context questions like those Salmon raises. Here goes, starting with a lot of specific points.
Is the Generation team cooking the books, index-shopping, “p-hacking,” or in other ways cheating by choosing the MSCI World Index as the benchmark for their success? (Over the past 10 years, that MSCI index had a 7 percent average annual return. Generation averaged 12.1 percent.) Answer: Not as far as I can see. From the start the broadly accepted MSCI World Index was the benchmark for their global-equity fund, which accounts for most of their holdings.
Why not use the better-performing S&P 500 as a benchmark? Because that is a U.S. index; their holdings are international.
What is the MercerInsight assessment that shows Generation’s results to be so strong? It’s from Mercer, a well-known firm that among its products offers a proprietary assessment of asset-manager performance. That is where I got my figures. Also a recent article in Institutional Investor quoted another source, eVestment, as saying that Generation’s returns had been 12.14 percent over the past decade, versus the 12.1 percent I attributed to Mercer.
Does Generation really have $12 billion under management? That’s what they tell the regulators.
Why has Generation closed its best-performing global equity fund? In London they told me they were deliberately capping its size because they did not want to let it get unmanageably large. Instead they have been opening new funds.
Why do they have a $3 million minimum-investment threshold? Their clients are mainly big institutional investors.
Do they hold any bonds? The global-equity fund is mainly for stocks.
Do they actually hold shares longer than other managers? When I asked, they said that their average share-holding duration was 3 years. I didn’t check systematically, but published reports suggest that many managers turn over their entire portfolio within a year or less.
Why are they buying only companies they like, rather than shorting companies they don’t? I asked this in London and was told that they consider themselves an investment fund, not a hedge fund. That is, as one of their people put it to me, “We want to reward companies we think are doing well, not penalize ones we think are doing poorly.” For better or worse it’s a deliberate choice.
Why do they hold less of the Irish company, Kingspan, than they used to? Because (as they told me when I asked) they have a “value” measure as well as a “sustainability” measure. If they like a company but it’s too expensive, they don’t buy. If they like it but it gets too expensive, they sell.
Do they really interact with management, as active “owners”? That’s what they said. “We want to be active owners, not activists,” one said.
Is Al Gore more than a rainmaker? They claim he is.
Why didn’t I write more about the mechanics of buying and selling? I thought I did a fair amount, but for more you can check an explicitly financial publication (Institutional Investor) or a business case study (this proprietary one from Harvard Business School).
Now, the big and important question:
Does anyone at Generation imagine that, on their own, they’re changing the course of capitalism? That’s not what I understood. I understood them to say that their track record deserved consideration as a test case of the proposition that “sustainable” investment could bring high returns.
As it happens, that’s just what I said in the piece: “Their demonstration has its obvious limits: It’s based on the track record of one firm, which through one decade-long period has managed assets that are merely boutique-scale in the industry’s terms…. Generation’s goal is to present an example of a less environmentally and socially destructive path toward high returns.”
Where can you read more, for the sorts of things I didn’t get to in the piece? Here is a start:
“Sustainable Capitalism,” the main “what we’re trying to accomplish” policy paper from the Generation Foundation, the advocacy arm of Generation, published in 2012.
“From the Shareholder to the Stakeholder,” an influential report last year from Oxford University and Arabesque partners, which I mentioned in my piece. It argued that recent evidence showed that long-term-minded, “sustainability”-conscious investors made more rather than less money.
The new issue (subscribe!) has my article on Generation Investment Management, the London-based financial firm Al Gore co-founded more than a decade ago. Generation has been very profitable, and Gore and his colleagues contend that its success should draw attention toward the rewards of environmentally conscious “sustainable capitalism.”
Felix Salmon, the prominent financial writer and senior editor for Fusion, has some thoughts about this piece, what Al Gore and his colleagues are up to, and what it all does or does not mean. As will become obvious, there are parts of Salmon’s letter I like and agree with more than other parts, and I think that many of his complaints boil down to this not being a different kind of article for a different kind of readership in a different, more financial-insidery kind of newspaper or magazine. Or by a different writer! Some other parts, I think, are versions of the “$20 bill on the sidewalk” outlook I mention in the article: the Gore/Generation practices can’t really be that successful, because if they were everyone would already have adopted them. (“That can’t be a $20 bill on the sidewalk, because if it were someone would already have picked it up.”)
But there are also some good fundamental questions he asks about the implications of this model, which I’m resisting answer piecemeal and will begin responding to tomorrow. For now, I’m grateful to Salmon for letting me quote it in full and kick off the discussion.
Felix Salmon writes:
This is a fascinating and yet frustrating article, at least for me. It’s by far the most in-depth thing that has ever been written about Generation, but I feel like it doesn’t really answer any of the questions I had about the company, most of which arose when I wrote this piece about why more investors don’t divest from fossil fuels. The Generation view would have involved me putting something in there about how solar is a much better investment than coal, or some such, but because Generation is so secretive about its results, I couldn’t really do that.
1: *How*, exactly, does the Generation model “shift the incentives of financial and business operations to reduce the environmental, social, political, and long-term economic damage being caused by unsustainable commercial excesses”? Is it basically just by saying to companies “if you behave this way, then we will be more likely to buy your stock”? It seems to me that whether or not Generation has done well for itself and its investors, there’s really no evidence at all that it has shifted any incentives even in the companies it invests in, let alone in the companies that it *doesn’t* invest in.
To take a big example, how, say, are Exxon Mobil’s incentives shifted by the the existence of Generation, and companies like it? The story says that Generation is “reducing the destructive side effects of modern capitalism”, but I don’t see any evidence of that?
2: The benchmark being used here is the MSCI World, which, fine, is as good a benchmark as any, I guess. (Although it ignores the bulk of all investable global assets, in that it includes no fixed-income bonds. Does Generation invest in bonds at all? Or anything other than publicly-listed stocks? From the story I’d guess not, but who knows.)
Still, you have to set your benchmark ex ante, not ex post. Did Generation say, when it was founded, that its benchmark was going to be the MSCI World? Because if it didn’t, this is basically the investment version of p-hacking. [JF note: More on p-hacking here.] The main benchmark that investors tend to use is the S&P 500, which has significantly outperformed the MSCI World over the past 10 years.
3: What is this Mercer “survey” on which the claims of outperformance are based? The piece annoyingly has no hyperlinks, even to things like public Andy Haldane speeches, so I’m unclear on whether the survey is even public. [JF note: I’ll try to restrain myself in general, but this doesn’t have links because it’s an article from the print magazine.] And is the 12.1% figure before or after Generation’s fees? How much is Generation charging for its revolutionary model?
4: More p-hacking: all we’re being told about here is the 10-year return of a single Generation fund, which may or may not be the one which is closed to new investment. Remember that because Generation is highly secretive about its results, it gets to open itself up to Jim Fallows on its own schedule, at exactly the point at which it can claim the best results. What we don’t see in the article is even a simple chart of the value of $1,000 invested in Generation: all we get is a single datapoint of the 10-year annualized return. Which is interesting enough, as far as it goes, but how’s the 5-year return? The 3-year return? And, more importantly, what are the *investor* returns, as opposed to the *investment* returns?
If I could only get one number from Generation, this is the one I’d be most interested in: what is the average annualized return per dollar invested with the company? Here’s my suspicion: that Generation launched with a small amount of seed investment from its founders and maybe a passel of other Davos Man types. (Big institutional investors don’t even tend to consider a fund for investment until it’s at least 3 years old.)
During its first three years, when it was very small, Generation managed to do extremely well — so well, indeed, that it was able to attract billions of dollars in institutional capital. (We’re told Generation has $12 billion in AUM, although investment firms have all manner of ways of exaggerating that number, and I’m not sure I believe it.) But in the years since — in the years in which it has been a multi-billion-dollar investment fund — Generation has not been able to replicate the results it had when it was small, and as a result, none of its institutional investors have seen the 12% returns that you talk about. Has Generation actually managed to prove that it can deliver above-market returns to investors? I’m still unconvinced on that front.
5: Talking of which: Why is the fund closed to new investment? Ambitious investment managers like Blood and Gore don’t tend to do such things unless there’s some kind of problem with the fund in question. Best case scenario is that the fund can’t scale: it works when it’s small, but not when it has real money. Worst case scenario is that the fund is just doing really badly, however well it did in the early years.
For that matter, what’s with the $3m minimum, not being open to normal investors, etc? If this is going to revolutionize capitalism, rather than just being a feel-good diversification play for the ultra-rich, why can’t all of us be part of it? And why is Al Gore, of all people, gating himself off from 99.9% of the population who might be interested in going down this road?
6: The noncommittal quote from David Rubenstein is golden. But isn’t it that case that the likes of Rubenstein have vastly more ability to actually change the way that companies are run than the likes of Blood & Gore? Rubenstein has almost total control of the companies he buys. He can run them as sustainably as he likes, with an eye to as many different bottom lines as he likes. He can change them in deep, far-reaching ways. Whereas all that Generation can do, really, is buy and sell stocks on the secondary market.
Even Larry Fink, with his trillions under management, can’t do much more than that: look how much of his company is iShares, for instance, and other passive investment vehicles which give managers essentially no discretion over what to buy and sell.
7: But also, Rubenstein is right about constraints. Generation is trying to make money by trading in and out of roughly 125 companies, all of which are, to a greater or lesser degree, “sustainable”. That’s great. But what would happen if it then gave itself the *option* to trade in and out of other companies which are *not* sustainable? That option has some value, no? Would it not help if Generation understood Exxon Mobil well enough to be able to short it, rather than just taking long positions in its cleantech competitors?
8: There’s lots of talk in this piece about the problems of short time horizons, with a hinted implication that Generation’s time horizons are long, or at least longer. But some numbers would be really helpful here. Are Generation’s time horizons longer than any other institutional fund manager? How long does Generation hold on to its positions, on average, and how does that number compare to its more conventional competitors? That kind of thing. I’m perfectly willing to believe that Generation’s *analysis* involves a long-term outlook. Almost all stock analysis does. But does its investment behavior reflect that?
9: There’s also a bunch of talk about inequality, and wealth disparity, and that kind of thing — but how does running billions of dollars for major institutional investors, and delivering above-market returns on those billions, *decrease* inequality? Surely the more successful Generation is, the richer rich people like Al Gore become, and the more that inequality goes up.
10. It seems obvious to me that Gore’s job at Generation is the classic chairman job of asset-gathering. He’s not picking stocks, or making buy or sell decisions, or anything like that: he’s a sales guy, trying to persuade huge institutions to give him some of their billions. He’s also had ten years to perfect his sales pitch. When faced with a guy like that, you naturally need to have a certain degree of skepticism about what he’s selling, unless you can independently come to the same conclusions.
But it seems to me that Gore has almost complete control over what he chooses to reveal about Generation’s results, when he chooses to reveal it, and what he keeps secret. No one can do the kind of independent analysis on Generation that Generation does on the companies it invests in. Or if they can, they can only do so under strict NDAs. I’d love to know whether you talked to any of the investors in Generation, to see whether they are actually as happy with Generation’s returns as Gore would like us to think that they are. [JF: OK, I can’t resist on this either. Yes.] Or, better yet, whether he talked to anybody who kicked the tires and decided *not* to invest.
11. How does the actual business of buying and selling work? This is incredibly vague to me. The only example in the article is that of Kingspan, where we’re told that Generation bought 5% of the company in 2007, and then bought more and more stock when it got cheaper. Which implies to me that it should have well over 5% of Kingspan right now — but a quick Google search shows that in fact it only has 3.87%. Did Generation cash out when its investment became profitable? Did it even make money on Kingspan? I’m very unclear on what the Kingspan story is meant to be telling us.
12. There’s a lot of mean stuff written in this article about other firms on both the buy side and the sell side, and how short-termist they are, and how obsessed they are about stock price, and how their live events and conferences are incredibly narrowly focused, and stuff like that. But of course no names are named, at least on the buy side, and I do wonder how much of a straw man this is. The investors I know tend to spend a very great deal of time looking at long-term trends and the like, while it’s obvious to me that Generation, just like any other shop, has traders who are ultimately in charge of buy and sell decisions and who Jim probably didn’t talk to at all. Is Generation really all that different? Isn’t compensation based on 3-year performance, for instance, pretty standard for this kind of company?
13. In any event, even if Generation and investors like it do succeed in getting above-market returns from long-term investments in sustainable companies, how does that change anything? If you’re a long-term investor, after all, then pretty much by definition you’re not a marginal price-setter; that’s always going to be a short-term hedge fund or algobot. The effect on companies’ share prices is going to be de minimis, and the effect of companies’ share prices on the planet is going to be even smaller. I really don’t see how a tweaked investment strategy for rich institutions is going to Reform Capitalism, let alone change the planet, or reduce inequality, or anything like that. I mean, Al Gore is (sorry) no Warren Buffett. And even Warren Buffett hasn’t really changed anything!
Thanks to Felix Salmon for a bracing kickoff to a discussion. Stay tuned for more.
In every issue and most every article, we try to tell you about ideas and developments you might not have come across before. As a reporter, I like the job best, and feel most alive, when being exposed to some new-to-me culture or organization or approach to life. A Chinese factory, a software startup, a genomics-research lab, an aerospace design center, a Border Patrol unit—these are the sorts of places that I’ve had the luck to spend time inside, begin learning about, and try to describe in the magazine. The structure of a great many of our Atlantic stories, and nearly all of mine, then boils down to: “Here’s a question I had, here’s how I looked for answers, and here’s what I found.” That’s what I’ve done in this case, and I think the results contain genuine news.
Through the past few months I’ve had what I found one of the most engrossing of these exposures. It’s the one this piece describes, involving the Generation Investment Management firm of London, which Gore helped found. In the article I do my best to describe why the firm’s approach to the world is interesting, unusual, and potentially quite significant — and why its approach has led to better returns than virtually any other asset-manager in its class. I’ll let you go there yourself to judge the case the company is making. Why the “green Warren Buffett” comparison? Because Buffett shifted investment strategies by showing that his could pay outsized returns. That is what Gore is attempting as well.
Just one other word of set-up: perhaps the most interesting substance sections of tonight’s Democratic debate on CNN about the future of capitalism. That wasn’t something you’d expect from this kind of event, but it came up — and it isdirectly connected with the ideas Gore is dealing with. Over to the article for more.
Meanwhile, I talked with Kai Ryssdal of Marketplace about the piece, for a segment they ran this evening. You can find it here.
The president crossed an important line when he canceled a meeting with the Danish prime minister.
Yesterday, President Donald Trump canceled a meeting with the new Danish prime minister, Mette Frederiksen, because she refuses to discuss the sale of Greenland. Greenland used to be a Danish colony but now belongs to the people of Greenland—the Danish government could not sell the island even if it wanted to. Trump likely did not know that Denmark is one of America’s most reliable allies. Danish troops, for example, fought alongside U.S. forces in Iraq and Afghanistan and suffered 50 fatalities, and Danish forces were among the earliest to join the fight against the Islamic State.
Many Americans may laugh off Trump’s latest outrage, but Trump crossed an important line. It is one thing to float a cockamamie idea that no one believes is serious or will go anywhere. “Let’s buy Greenland!” Yes, very funny. A good distraction from the economy, the failure to deal with white supremacy, White House staff problems, or whatever is the news of the day. It is quite another to use leverage and impose costs on Denmark in pursuit of that goal—and make no mistake, canceling a presidential visit is using leverage and imposing costs. What’s next, refusing to exempt Denmark from various tariffs because it won’t discuss Greenland? Musing on Twitter that America’s defense commitments to Denmark are conditional on the negotiation? Intellectual justifications from Trump-friendly publications, citing previous purchase proposals and noting Greenland’s strategic value and abundance of natural resources? (That last one has already happened.)
Meritocracy prizes achievement above all else, making everyone—even the rich—miserable. Maybe there’s a way out.
In the summer of 1987, I graduated from a public high school in Austin, Texas, and headed northeast to attend Yale. I then spent nearly 15 years studying at various universities—the London School of Economics, the University of Oxford, Harvard, and finally Yale Law School—picking up a string of degrees along the way. Today, I teach at Yale Law, where my students unnervingly resemble my younger self: They are, overwhelmingly, products of professional parents and high-class universities. I pass on to them the advantages that my own teachers bestowed on me. They, and I, owe our prosperity and our caste to meritocracy.
Two decades ago, when I started writing about economic inequality, meritocracy seemed more likely a cure than a cause. Meritocracy’s early advocates championed social mobility. In the 1960s, for instance, Yale President Kingman Brewster brought meritocratic admissions to the university with the express aim of breaking a hereditary elite. Alumni had long believed that their sons had a birthright to follow them to Yale; now prospective students would gain admission based on achievement rather than breeding. Meritocracy—for a time—replaced complacent insiders with talented and hardworking outsiders.
He understands men in America better than most people do. The rest of the country should start paying attention.
Every morning of my Joe Rogan experience began the same way Joe Rogan begins his: with the mushroom coffee.
It’s a pour-and-stir powder made from lion’s mane and chaga—“two rock-star mushrooms,” according to Joe—and it’s made by a company called Four Sigmatic, a regular advertiser on Joe Rogan’s wildly popular podcast. As a coffee lover, the mere existence of mushroom coffee offends me. (“I’ll have your most delicious thing, made from your least delicious things, please,” a friend said, scornfully.) But it tastes fine, and even better after another cup of actual coffee.
Next, I took several vitamin supplements from a company called Onnit, whose core philosophy is “total human optimization” and whose website sells all kinds of wicked-cool fitness gear—a Darth Vader kettlebell ($199.95); a 50-foot roll of two-and-a-half-inch-thick battle rope ($249.95); a 25-pound quad mace ($147.95), which according to one fitness-equipment site is a weapon dating back to 11th-century Persia. I stuck to the health products, though, because you know how it goes—you buy one quad mace and soon your apartment is filled with them. I stirred a packet of Onnit Gut Health powder into my mushroom coffee, then downed an enormous pair of Alpha Brain pills, filled with nootropics to help with “memory and focus.”
“Wealth work” is one of America’s fastest-growing industries. That’s not entirely a good thing.
In an age of persistently high inequality, work in high-cost metros catering to the whims of the wealthy—grooming them, stretching them, feeding them, driving them—has become one of the fastest-growing industries.
Low-skill, low-pay, and disproportionately done by women, these jobs congregate near dense urban labor markets, multiplying in neighborhoods with soaring disposable income. Between 2010 and 2017, the number of manicurists and pedicurists doubled, while the number of fitness trainers and skincare specialists grew at least twice as fast as the overall labor force.
While there are reasons to be optimistic about this trend, there is also something queasy about the emergence of a new underclass of urban servants.
AM stations mainly wanted to keep listeners engaged—but ended up remaking the Republican Party.
No one set out to turn the airwaves into a political weapon—much less deputize talk-radio hosts as the ideological enforcers of a major American political party. Instead the story of how the GOP establishment lost its power over the Republican message—and eventually the party itself—begins with frantic AM radio executives and a former Top 40 disc jockey, Rush Limbaugh.
In the late 1980s, AM radio was desperate for new content. Listeners had migrated to FM because music sounded better on there, and advertising dollars had followed. Talk-radio formats offered a lifeline—unique programming that FM didn’t have. And on August 1, 1988, Limbaugh debuted nationally. At the outset, Limbaugh wasn’t angling to become a political force—he was there to entertain and make money. Limbaugh’s show departed from the staid, largely nonpartisan, interview and caller-based programs that were the norm in earlier talk radio. Instead, Limbaugh was a consummate showman who excited listeners by being zany and fun and obliterating boundaries, offering up something the likes of which many Americans had never heard before.
Can straight men and women really be best friends? Their partners are wondering, too.
In 1989, When Harry Met Sally posed a question that other pop-cultural entities have been trying to answer ever since: Can straight men and women really be close friends without their partnership turning into something else? (According to The Office, no. According to Lost in Translation, yes. According to Friends … well, sometimes no and sometimes yes.) Screenwriters have been preoccupied with this question for a long time, and according to a new study published in the Journal of Relationships Research, the question is also likely to be on the minds of people whose romantic partners have best friends of the opposite sex.
For the study, Eletra Gilchrist-Petty, an associate professor of communication arts at the University of Alabama in Huntsville, and Lance Kyle Bennett, a doctoral-degree student at the University of Iowa, recruited 346 people, ranging in age from 18 to 64, who were or had been in a heterosexual relationship with someone who had a different-sex best friend. When they surveyed participants’ attitudes toward cross-sex best friendships, they found that people who are engaged to be married look more negatively on those friendships than married, single, or dating people. They also found that people who are skeptical of cross-sex best friendships in general are more likely to “lash out” at their partner when they feel threatened by the partner’s best friend—as opposed to constructively communicating with their partner, or with the friend, about the situation.
Next week’s deadline to qualify for the third Democratic debate could leave half of the large field of candidates on the sidelines.
For a handful of Democratic candidates stuck at 1 percent (or lower) in the polls, a Wednesday afternoon in the dog days of August could be the moment when their lifelong dream of the presidency dies a quiet death.
August 28 is the deadline for candidates to meet the Democratic National Committee’s heightened threshold for entry into the September debate, and as much as half the field is expected to wind up on the sidelines. Those who don’t make the cut will, at a minimum, be forced to reassess the viability of their long-shot bids. Some of those also-rans may trudge on through the fall, in the hopes of rebounding for the next debate in October, or simply out of a commitment to stay in the race until the first votes are cast in Iowa next February.
The president often implies that what determines national loyalty is not citizenship but ethnicity, religion, and race.
Donald Trump isn’t only venomous; he’s also vague. So when he said yesterday that “any Jewish people that vote for a Democrat, I think it shows either a total lack of knowledge or great disloyalty,” it wasn’t entirely obvious whom he was accusing Jewish Democrats of being disloyal to. But the most plausible explanation is that he was accusing them of being disloyal to Israel.
In the previous sentence, Trump had condemned Democrats for “defending these two people”—Representatives Rashida Tlaib and Ilhan Omar—“over the State of Israel.” And in the past, Trump has repeatedly spoken about American Jews as if they were Israelis. In an April speech to the Republican Jewish Coalition, he called Benjamin Netanyahu “your prime minister” and warned that a Democratic victory in 2020 “could leave Israel out there all by yourselves.” At the White House Hanukkah Party last December, he told the mostly Jewish audience that Vice President Mike Pence and his wife, Karen, “love your country. And they love this country.”
Just a few hours of therapy-like interventions can reduce some people’s anxiety.
The strange little PowerPoint asks me to imagine being the new kid at school. I feel nervous and excluded, its instructions tell me. Kids pick on me. Sometimes I think I’ll never make friends. Then the voice of a young, male narrator cuts in. “By acting differently, you can actually build new connections between neurons in your brain,” the voice reassures me. “People aren’t stuck being shy, sad, or left out.”
The activity, called Project Personality, is a brief digital activity meant to build a feeling of control over anxiety in 12-to-15-year-olds. Consisting of a series of stories, writing exercises, and brief explainers about neuroscience, it was created by Jessica Schleider, an assistant professor at Stony Brook University, where she directs the Lab for Scalable Mental Health. She sent it to me so I could see how teens might use it to essentially perform psychotherapy on themselves, without the aid of a therapist.
Hundreds of skeletons are scattered around a site high in the Himalayas, and a new study overturns a leading theory about how they got there.
In a kinder world, archaeologists would study only formal cemeteries, carefully planned and undisturbed. No landslides would have scattered the remains. No passersby would have taken them home as souvenirs, or stacked them into cairns, or made off with the best of the artifacts. And all this certainly wouldn’t be happening far from any evidence of human habitation, under the surface of a frozen glacial lake.
But such an ideal burial ground wouldn’t have the eerie appeal of Skeleton Lake in Uttarakhand, India, where researchers suspect the bones of as many as 500 people lie. The lake, which is formally known as Roopkund, is miles above sea level in the Himalayas and sits along the route of the Nanda Devi Raj Jat, a famous festival and pilgrimage. Bones are scattered throughout the site: Not a single skeleton found so far is intact.