The Digest #87

Published on June 27, 2021

The Four Americas

I spent most of Saturday catching up on some reading, something that is much easier to do when one avoids social media. I have a number of articles and podcasts to share, but first I’d like to highlight a long essay written by George Packer for the July/August issue of The Atlantic called The Four Americas

Few essays have the power to elicit anger, agreement, sadness, thoughtfulness, and at least some hope for the future. But before making a few comments on Packer’s essay, consider the following resolution passed by the House of Representatives 103 years ago in an attempt to define the national creed:

“I believe in the United States of America, as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign Nation of many sovereign States; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes. I therefore believe it is my duty to my country to love it, to support its Constitution, to obey its laws, to respect its flag, and to defend it against all enemies.”

— American Creed by William Tyler Page, adopted by the U.S. House of Representatives on April 3, 1918 as “The American’s Creed”

The very notion of a national creed seems old fashioned and perhaps even objectionable, but it is true that institutions require some common narrative that nearly everyone agrees on in order to function well — in other words, a set of baseline beliefs and assumptions about the world that are seen to hold true. It is what the author Yuval Noah Harari refers to as “fictive language” in Sapiens, his best-selling book about the history of humankind which I reviewed a few years ago.

Fictive language emerged 70,000 years ago, according to Harari, and bound together human beings with shared narratives regarding very abstract concepts. These sets of beliefs allow people to make assumptions regarding others in society who they come across and, in many ways, defines the “rules of the road” when it comes to human interaction. It doesn’t mean that people will not have disagreements, even vociferous ones, but it does mean that they are at least speaking the “same language” creating some common ground in which debate is possible.

The ideas behind the American revolution were abstractions born in the Enlightenment and formed a national creed that drove the principles upon which the country was founded. The national creed was imperfect and excluded large groups of people, with slavery being the most obvious example. Over time the creed changed and brought more inclusion to previously oppressed groups — the forward progress of the enlightenment was the guiding force and also the intellectual argument behind enfranchising more people.

What Packer’s essay grapples with is the gradual crack-up of the American creed over the past half-century. Rather than having one national creed that nearly everyone can relate to, we now are divided into four “countries” from a cultural, intellectual, and geographical standpoint. 

  • Free America believes in a libertarian ideology that is perhaps closest to the vision of most of the founding fathers and Packer alleges that this narrative has been the most powerful of the past half century. I took some exceptions to his statements regarding the motivations of proponents of this narrative. However, I give credit to Packer for admitting his bias: “In 1980, the first year I cast a vote, I feared and hated Reagan.” “Free America” was the dominant force in the Republican Party for decades until very recently.
  • Smart America is comprised of the top ten percent of the population that is highly educated, at ease with modernity, comfortable with adopting emerging technology, and lives in and around the nation’s big metropolitan areas. This is where Packer appears to self-identify, and indeed most of the readers of this newsletter are likely to at least partially identify with this America. In recent years, this group of Americans have increasingly gravitated to the Democratic Party, especially since 2016.
  • Real America can be best described as “flyover country”, but it is more of a state of mind where individuals identify strongly with a specific location, culture, family, and traditions. While there is some overlap with “Free America” here, Packer makes a distinction and asserts that “Real America” is less optimistic, more reactionary, and less open to change than the libertarianism of “Free America”. Of course, “Real America” was the base of support for President Trump and is now the dominant force in the Republican Party. 
  • Just America has been the most powerful force in the Democratic Party in recent years, in part a reaction to the ascendency of “Real America”. This movement views America as fundamentally and structurally flawed in ways that cannot necessarily be remedied by the existing political system. The entire system is viewed as corrupt and in need of massive changes such as restructuring the Senate, adding Justices to the Supreme Court, eliminating the electoral college, imposing wealth taxes, and paying reparations to the descendants of slaves.

If one accepts the premise that we have “four Americas”, it is interesting to note that we still have only two viable political parties

The Republican Party is now a coalition of “Free America” and “Real America” while the Democratic Party is a coalition between “Smart America” and “Just America”. Predictably, this state of affairs creates significant conflicts. 

There is little overlap, in my opinion, between the libertarianism of “Free America” and the policies favored by “Real America” that were implemented by Donald Trump. Similarly, rifts exist in the Democratic Party because “Smart America” has an enormous stake in the existing system and is not interested in completely upending the country as “Just America” would like.

I suspect that most readers of Packer’s essay will identify with more than one of his “Americas”. That was certainly the case for me. But his point is that a large percentage of Americans identify solely with one of the four while vilifying the others. If that’s true, it presents serious problems for the future of the country.

(Note: I found out about this essay while listening to this episode of the Thomas Jefferson Hour, a weekly podcast that I recommend to those interested in early American history.)


Ted Weschler’s Letter to ProPublica In response to an article on Roth IRAs published by ProPublica, Ted Weschler provided some interesting information regarding the performance of his IRA over the past several decades. Weschler opened his IRA in 1984 which grew to just over $70,000 by 1989 when he left his job to start a private equity firm. Over the next 29 years, Weschler invested the account exclusively in publicly traded securities. In 2012, his IRA was worth an amazing $131 million when he converted it from a traditional IRA to a Roth IRA and voluntarily paid over $28 million in taxes. The account grew to $264.4 million by the end of 2018. Weschler points out that each dollar he saved as a 22 year old grew to over $9,000 over thirty-five years. Simply amazing, and it was all done with securities that were available for anyone to purchase. Warren Buffett hit a home run by hiring Weschler back in 2011.

2021 Global Survey of Individual Investors, June 2021. The Natixis Global Survey of Individual Investors asked 8,550 individual investors in 24 countries for their views regarding a number of economic and investment related topics. What jumps out is how unrealistic individual investors are when it comes to the returns they anticipate from financial assets. The global average expectation is for a 14.5% real return, that is a return above inflation. In the United States, the average real return expectation is an even more crazy 17.5%. What is even more alarming is that return expectations have been rising along with asset prices. Logically, investors should expect real returns to be lower in the future when returns are exceptionally high for a period of time, but the opposite is true. This is a recipe for extreme disappointment and reminds me of the late 1990s (I recommend reading Warren Buffett’s speech at Sun Valley in 1999 about investor expectations at that time). (Natixis)

New prehistoric human unknown to science discovered in Israel by Rossella Tercatin, June 24, 2021. This is a fascinating article about fossil evidence found in Israel that has led scientists to believe that an entirely new early human has been discovered. The “Nesher Ramla” human, named after the site of the discovery, is believed to be the ancestor of the Neanderthals and other archaic Asian populations. This discovery provides evidence that there was a time when the Nesher Ramla coexisted with both Neanderthals and what would become homo sapiens. In addition to the article, there is a YouTube video describing the new discovery. (Jerusalem Post)

Preliminary Assessment: Unidentified Aerial Phenomena, June 25, 2021. In recent years, there have been verified sightings of unidentified flying objects that move in ways that are not possible with technologies known to the United States government. These incidents have been reported by numerous pilots and, at the very least, pose a risk to aviation. The government has no idea what these objects are and, surprisingly, admits as much in this recent report. While those of us who have been fascinated by the idea of alien UFOs since childhood, the report makes for exciting reading. But perhaps the more troubling possibility is that very human adversaries of the United States have secretly discovered technologies that we cannot yet conceive of. Also, one wonders what the full classified report might include given how candid the unclassified report is … (Office of the Director of National Intelligence)

Podcasts and Video

Inner Game with Steven Cohen, May 16, 2021. Steven Cohen, hedge fund manager and owner of the New York Mets, describes how the world has changed during COVID, his own evolving patterns of work, and many related topics in this interview. I found the discussion interesting, but Cohen is a controversial figure. His prior firm, S.A.C. Capital, pleaded guilty to securities fraud in 2013, was forced to close, and paid $1.8 billion in forfeitures and penalties, as this New Yorker article describes. Cohen himself was never charged but he was barred from managing outside money until 2018. He currently managed Point72 Asset Management. (Stray Reflections)

Fintech, Sourcing Ideas, Investing Books, and Other Questions From Twitter, June 25, 2021. Geoff Gannon and Andrew Kuhn answer listener questions regarding a range of topics in the 317th episode of this long running podcast. (Focused Compounding)

Taleb on Bitcoin at the CoinGeek Zurich Conference, June 25, 2021. Nassim Taleb has been making the case against Bitcoin on Twitter recently, and also published a paper which I linked to in last Wednesday’s newsletter. Taleb was initially a believer in Bitcoin but recently changed his mind based on a number of factors which he explains in this video, which also appears below.

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The Digest #87
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