A NET ZERO SUM GAME – ESG INVESTMENT

A NET ZERO SUM GAME – ESG INVESTMENT

7 Jun 2021

When money and virtue share a bed, strange and disturbing things tend to happen.  I have written before (in 2014) about the ethical contradictions concerning the destination of the UK’s Oversea Development Aid budget. Seventy three percent of it went to countries where homosexuality was illegal but if there was ever any debate about that I never heard it. Like a Christmas sweater, the giving is more important than the receiving. Once the donation box has been ticked we can pat ourselves on the back and tell ourselves that to enquire about how the money is spent would be colonial and racist. Seven years later, the shadow of virtue casts a much longer and no less contradictory shadow. Here is a brief case study. THE ETHICS OF TOP LEVEL SOCCER I have found the current season of the English Premier League quite hard to watch. The team with the biggest financial backing won easily. Three brave and impoverished strugglers were relegated long before the end of the season. In stadiums empty of fans (who might well have reacted with displeasure) the clubs and officials all participated in “taking the knee”, originally a show of disrespect for the US national anthem, despite it seeming obvious that the anti-capitalist vibe of Black Lives Matter could hardly be further from the realities of club ownership.  These realities came to a head when some of the owners, acting as if they thought the clubs belonged to them, tried to create a breakaway super league. The result was a mob of multi-millionaires, who, unlike the owners, owed their personal wealth to football itself, rushing to denounce the idea that money should be allowed to ruin the game, as they saw it. Many people, unless they happen to support the clubs funded by wealthy foreigners, would say that that ship sailed a long time ago.  While UK football constantly pledges to “kick out racism” and to take women’s soccer seriously there is not a whisper on the subject of sexual orientation. In the past, fans have been notoriously homophobic. They may not be now but we have no way of knowing because, as luck would have it, not one of...

INNOVATION AND DEFLATION – THE END OF THE AFFAIR?

INNOVATION AND DEFLATION – THE END OF THE AFFAIR?

26 Mar 2021

INFLATION – WHAT THEY TEACH YOU AT SCHOOL I remember from economics lessons at school that there were supposedly two categories of inflation, namely cost-push and demand-pull. This was simple enough for anyone, even a pubescent schoolboy, to understand.  Now I can see that this was something of an oversimplification (for which I was no doubt grateful). Supply and demand do not happen in isolation. They respond to each other over time. It is instructive to remember that the price of anything will rise when the current supply is insufficient to satisfy demand and of course it works in reverse.  Yet the demand element of inflation is what occupies most “informed” chatter. That’s probably because we have a more immediate feeling for it. At present there is said to be a dam of spending waiting to spill out as soon as the first world countries are released from lockdown (I’m assuming it will happen one day – stock markets are impatiently celebrating it already).  Consensus says that this will give a transitory boost to inflation which will then subside because private sector unemployment is too high – in short, the poor sods who have been screwed by lockdown will exert a deflationary effect that prevents the economy from overheating. This in turn is offered as a justification for the probability that central banks will not raise interest rates. Well, yes. Given that the US, European, UK and Japanese economies are all funded by the state balance sheets, I think we can reasonably act as if the date for the next increase in official interest rates is approximately never.  SUPPLY SIDE INFLATION But supply side inflation – now that’s a story. Energy, commodity and shipping prices are really moving this year. Given that most of the world’s major economies are still in recessionary territory that’s quite impressive.  SAMPLE OF PRICE CHANGES IN THE LAST SIX MONTHS   Carbon steel 107.8% Container rates 81.4% Oil 49.2% Lumber 44.7% Soybeans 39.8% Iron ore 38.8% Copper 31.7% Coal 31.4% Cotton 31.3% Sugar 23.1% Aluminium 22.9% Natural Gas 21.1% Wheat 12.9% Rice 8.1% IN THE PAST, TECHNOLOGY HAS BOOSTED EFFICIENCY AND CUT COSTS So what is going on? I...