Episode 288: The Crazy Things People Say

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1:04Hello, and welcome to David Bonson's Capital Record. Brought to you by National Review, where today I'm going to go around a few different things. I think all the topics are correlated, but I heard so many interesting comments and statements in the last week that really provoked a certain ideological philosophical and economic response for me that I want to share it with you listeners of Capital Record. Before I get into today's episode, let me just remind you that last week's episode, where I had an over hour long conversation with Tim Estes on AI, and where the right needs to frame and form and communicate a more thoughtful portfolio of policy and thinking about this AI Artificial Intelligence moment.

2:07One of my favorite Capital Record episodes you've ever had, if you missed it, please check it out. Okay. I'm going to go through about four or five different things real quickly here to repeat a comment and then offer a perspective that I think is consistent with the ideology that we have here at Capital Record, with my own affection for the concept of a free and virtuous society and the notion of economics rooted to first principles, driving human foreishing and doing so in a way that I think will be sustainable and up to the task of the moral adventure that it is. So a conference I spoke out recently, a comment someone made, I work with venture capital companies that have a high proficiency in what they do. They're good at being venture capital companies, whatever that may entail, but they often

3:08lack a moral formation. And I, of course, believe that there are a lot, I see it on Wall Street all the time, very good financial operators that may not have any moral formation or purposely intentionally epistemologically coherent moral formation. And I am one who believes very much that what we ideally want, whether it's in venture capital and technology, in finance and Wall Street, or for that matter in plumbing and HVAC, that what we want are people that both have the right moral formation and thinking and worldview orientation that then leads to application. However, I want to be very clear that what I do not want is someone who then says, hey, I got this moral formation down. I've learned to think and live like a moral being grounded human.

4:11And now I don't need the proficiency in venture capital that it is less important. In other words, I'm resistant to creating a dichotomy between proficiency in our craft and moral formation, both and not either or. And if we end up, because we say, oh, we have too many people that are highly proficient in VC and tech and not enough on the moral formation side. And we get on one side of the horse and fall off on the other. That is not any better. So the mutual exclusivity of these things is a fallacy and wetting together a high proficiency with this idea of the right human and moral formation is the objective that I think we need to have. All right. There's a television show. I cannot be clear enough here. Please understand I'm not recommending it. It is the most graphic, profane, just excessive grotesque show I've ever seen.

5:20I am not approved. I've been able to handle watching radar or movies and the unfortunate evolution with graphic material, both in sexual content and violence as an adult for a long time. But I honestly have never seen anything like this show. It's a show called industry on HBO and streaming on HBO and HBO Max or what have you. And it is a really, really good show that has just finished its fourth season. Originally, it was a group of kind of first year investment bankers that have fictitious investment banking firm in London. But then, I mean, the way in which this show puts in graphic, excessive, gratuitous sex and drug use is just disgusting. And I just find myself fast forwarding through tons of it. But then the plots, the financial sophistication in the show, the acting, there's all these

6:22other good parts. And myself working in finance and being so utterly bored with most Hollywood encapsulation of financial themes in scripted content. This is a good show that I end up having to put up with this disgusting stuff. I'm not bringing this up right now to promote the show because I literally would not promote it because of how grotesque this content I'm talking about is. So there's a line that one of the lead characters said that I almost lost it. And some of you thought I lost it a few weeks ago when I was responding to orange castes really disappointing hotbed in the New York Times. But this was a character on a show making a very similar mistake. And I want to read her line word for word. One of the lead characters, her name on the show, her character name is Harper, said to one of the other lead very successful finance years on the show, Eric. You picked a very transactional career where all the transactions add up to zero.

7:30It's a great line. One of the problems with it is it isn't even remotely true. Where people are engaged in investment banking and for that matter trading, they do not add up to zero. And there is not a zero sum component to financial activity. Now one could say one person bought a security, a derivative, some financial instrument and someone else sold it. And so one person paid 16 and one person received 16. And there may be a little spread in there or whatnot. But to the extent that the transaction serves a purpose like anything else, like when I give the four bucks to Starbucks for the coffee, it is not zero sum because Starbucks is doing more with the four bucks and I'm doing more with the coffee. And there are more productive transactions than others, you know, they're not all equal.

8:33But in the world of finance, there are moments at which a company is trying to raise money when a certain asset manager is trying to generate liquidity that they are moving into where there is a different opportunity. People perceive opportunities differently. There are a thousand different reasons that people could be buying and selling and how capital gets allocated. And the idea that everyone is just sitting around doing it at the end of the day, nothing has gotten any more valuable and that where capital ends up getting deploying to into new investments, new creations, new opportunities, private, public, secondary, primary. And that all of it just adds up to zero is just so stupid that I can't believe people are saying it. Now, Orin has a particular worldview and an agenda that is causing him to say it. I do think Orin knows it is true, but I get why he says it. And Orin genuinely wants to see a pro worker perspective and I just think he's wrong and

9:34how we're going to get that. Where they throw this in the show with this kind of left-leaning agenda to imply that all finances zero sum, it's wrong and they know it's wrong. So I wanted to go after that as well. Okay, I got to speed this up. Speaker I heard at a recent event saying that I've invested in 50 businesses with just phenomenal founders and in some cases I've said, I don't care if we lose all our money because these founders have done such amazing things for their employees and vendors. And I winced and I kind of, you know, I got a facial expression and I behaved myself. I was charitable and kind boy, is that an untrue thing to say? I know why people say it. It sounds so incredibly sanctimonious and righteous and pious.

10:35But if you really love what founders are doing and they're really great at taking care of employees and vendors, gosh, I would think that they'd be profitable unless they're not creating value for the end users of the products. But regardless, losing all your money as an investor in an investment that would mean that the company failed. And so this operator who is so great at taking care of vendors and employees is no longer great at taking care of vendors and employees because they're gone. Profitability and business success go hand in hand with believing in the mission of the organization because when you don't have profitability, the organization fails. And then that founder who you just love so much who is such a teddy bear with their employees can no longer be in that position. I don't want to mock it.

11:35I know I'm being a little sarcastic there, but I think you get what I'm saying here. Saying things like that, pitting profits against the underlying sustainable, admirable, noble intention and aspiration of a business is not helpful because then you're celebrating a failure that needs to the very people you're heralding going away. Capital allocation to rational and effective uses where people are taking care of employees and vendors and creating value. Now there could be a period of time where it's losing money and there's a long ramp up to get the profitability, but that's not what was said. It was like, I don't mind losing all my money in these investments because they're just doing such a great things. First of all, it's our true, I don't believe anyone's actually sitting around celebrating losing their money because their founder that they invested in was nice guy.

12:36But second of all, even to the extent that there is some real wonderful things that are happening in the enterprise, they can't keep happening if you lose all your money and all the investors are wiped out and the equity is repriced to zero and debt and creditors lose money. Getting to the point of being a successful, ongoing concern as a business is the important thing when the operator and founder actually has a missionally minded, valuable business. So let's not say silly things, all right, someone asked me a question, how much of the money you manage is purpose driven. I manage right now at over $9.5 billion at the Bonson Group and we hope to certainly be hitting $10 billion soon. We continue to grow and we are multi-asset firm managing a lot in public equity and dividend growth, stocks, a lot in private investments, a lot in real estate, a lot in fixed income.

13:41But I think it's a fair question because what they're really trying to get at is that there might be some portion of it that's sort of like sanctified, segregated for this kind of higher moral purpose. But as a man of faith who has a particular theology of kingdom and a theology of creation, I want to answer for capital record listeners very honestly, as one who rejects the platonic view of the world, that there is some elevated spirituality that is superior to the material universe. To answer to the question of how much the money we manage is purpose driven is 100%. If we manage $9.5 billion, then all $9.5 billion is purpose driven. There is no money that is disconnected to A, just if I could be a little theological for a moment, in terms of my interpretation of creation on normatives, the every dollar I believe is a part of the kingdom in serving some purpose to the totality of the kingdom of God. Apart from that theological nuance that some of you may not be interested in, all of

14:45it is purpose driven because all of it is geared towards basically playing a role in the financing of endeavors that promote human flourishing, that produce goods and services that meet human needs. Some may be able to be attached to a marketing message that sounds more purpose driven than others. All of this is under that umbrella, 100%, and I think that is true of everyone, and I think that the segregation, compartmentalization we do, which is often very dualistic, is fallacious, and I would like to say, I think it is often very crass at marketing driven. Finally, really sophisticated person making the comment as a pertains discussion of AI and a lot of people, myself included, Tim S. this last week wanting to really reinforce the primacy of human dignity in our belief system about AI, but for that matter, my belief

15:50system about all of economics, stating, well, human dignity rooted to Emigo Day is one thing we've heard a lot, but I should point out that there are other reasons to believe in human dignity apart from Emigo Day. Apart from the belief mankind has made an image of God, and I have no doubt that there are people that will make a case for humans having dignity, apart from the creational and theological rationale of humans being made an image of God, that that dignity we have, that we possess as a byproduct of God making us with that dignity as an image bearer of him holding his likeness to go co-create with him. I understand others would make a different argument, however, what I don't understand is anyone believing those arguments are valid, that they hold up. That essentially, any attempt to root the dignity of the human person to anything other

16:52than their status as an image bearer of God is built on Sandyland. The foundational view of the real foundational case for human dignity is rooted to Emigo Day, always and forever, and every other attempt, fall short. People say a lot of things, today in capital record, I had a lot of responses, I jumped over the map a little bit, I hope you see the thread that links some of these comments together, but these are the things we deal with in trying to make a case for a free and virtuous society. Thank you for listening to David Bonson's Capital Record.

17:52New things are as uplifting as the greatest moments in sports, and nothing brings us together quite like Team USA at the Olympic Winter Games. From NBC Universal's iconic storytelling to the innovative technology across Exfinity and Peacock, Comcast brings the Olympic Games home to America, sharing every moment with millions. When Team USA steps onto the world stage, we're not just watching, we're cheering together. This winter, we're all on the same team, Comcast, Proud Partner of Team USA.