Two things flashed upon my radar screen. Treasury Secretary Scott Bessent is restricting people who get public transfer payments from the federal government from sending the money across the US border to other countries.

The other is that California hired a DEI person to make sure California pensions are invested accordingly.

Why is Bessent correct and California wrong?

It’s because it is public money. Both the money for the transfer payments and the money to invest in public pensions are provided by taxpayers. It’s the public’s money, and the public has a general interest in seeing that money isn’t abused or used for fraudulent purposes.

Shouldn’t the transfer payments that the American taxpayer empathetically pays out to recipients who need it be spent in the US? Those payments should never be sent to anyone in other countries. It’s American taxpayer money. If that recipient wants to send money to someone in another country, they can go out and work for it.

Yes, people should be able to make individual allocation and spending decisions with their own money. Here is the key point: that they earned with their labor. When the taxpayer is footing the bill, the taxpayer gets to have a say in how it is spent.

In Ohio, they are taking it one step further. The Ohio experiment, if it happens, will be interesting to see how it plays out.

When it comes to investing as a state on behalf of taxpayers, the one true north star that should guide anyone is to get the best return on investment on behalf of the taxpayer, given the risk and reward of those investments, while paying attention to the liquidity requirements of stakeholders. Sometimes it can be a tricky balance. This is especially true when interest rates are moving and the underlying market forces are volatile.

There is no room for virtue signaling using DEI, ESG, or any other normative metric to guide investment decisions.

Public companies that are listed on stock exchanges can invest in the manner they want to invest, but do so with shareholders looking over their shoulders. There are also best practices guidelines they should hew to if they don’t want to get into trouble. If they don’t get good ROI and ROA, the management team risks losing their jobs. Most companies, public and private, do not have DEI/ESG as an integral part of their investment strategy. At least, not anymore. It was a fad for a while, and thankfully, it has been relegated to the dustbin. Better to have shareholders receive a dividend and decide what to do with the money themselves, since owning shares in a business is a claim on the cash flows of the business.

People can invest in causes or the “current thing” with their own private money that they earned themselves.

This is not a difficult concept. But advocates for DEI/ESG will cite all kinds of corner cases and irrelevant examples to try and muddy the waters.

Two things flashed upon my radar screen. Treasury Secretary Scott Bessent is restricting people who get public transfer payments from the federal government from sending the money across the US border to other countries.

The other is that California hired a DEI person to make sure California pensions are invested accordingly.

Why is Bessent correct and California wrong?

It’s because it is public money. Both the money for the transfer payments and the money to invest in public pensions are provided by taxpayers. It’s the public’s money, and the public has a general interest in seeing that money isn’t abused or used for fraudulent purposes.

Shouldn’t the transfer payments that the American taxpayer empathetically pays out to recipients who need it be spent in the US? Those payments should never be sent to anyone in other countries. It’s American taxpayer money. If that recipient wants to send money to someone in another country, they can go out and work for it.

Yes, people should be able to make individual allocation and spending decisions with their own money. Here is the key point: that they earned with their labor. When the taxpayer is footing the bill, the taxpayer gets to have a say in how it is spent.

In Ohio, they are taking it one step further. The Ohio experiment, if it happens, will be interesting to see how it plays out.

When it comes to investing as a state on behalf of taxpayers, the one true north star that should guide anyone is to get the best return on investment on behalf of the taxpayer, given the risk and reward of those investments, while paying attention to the liquidity requirements of stakeholders. Sometimes it can be a tricky balance. This is especially true when interest rates are moving and the underlying market forces are volatile.

There is no room for virtue signaling using DEI, ESG, or any other normative metric to guide investment decisions.

Public companies that are listed on stock exchanges can invest in the manner they want to invest, but do so with shareholders looking over their shoulders. There are also best practices guidelines they should hew to if they don’t want to get into trouble. If they don’t get good ROI and ROA, the management team risks losing their jobs. Most companies, public and private, do not have DEI/ESG as an integral part of their investment strategy. At least, not anymore. It was a fad for a while, and thankfully, it has been relegated to the dustbin. Better to have shareholders receive a dividend and decide what to do with the money themselves, since owning shares in a business is a claim on the cash flows of the business.

People can invest in causes or the “current thing” with their own private money that they earned themselves.

This is not a difficult concept. But advocates for DEI/ESG will cite all kinds of corner cases and irrelevant examples to try and muddy the waters.