Policy Pinpoint: Lessons of (Recent) History

Roll back in time to 1981 and picture your investment prospects. To get into character, find a bright yellow necktie, some suspenders, or a sturdy pair of shoulder pads. Now imagine leading your startup to provide efficiency improvements for cars or appliances, or putting some of the pension assets you manage in urban apartments. You'd have been reading the bumps in the time's economic road and reasoning how to surmount them, and you'd be picturing happier days to come.

As we rollick on our own bumpy economy, with stakes higher (and shoulder pads lower), let's learn about investment attitudes by considering a line from the farewell address that Jimmy Carter delivered in January 1981. It gives a frame for financial strategy in the long term after our current energy crisis.

Looking back on an oil embargo, Carter said that "the pursuit of happiness is a planet whose resources are devoted to the physical and spiritual nourishment of its inhabitants." Parse that. You can only strive when society works the stuff we find in nature to advance everyone's well-being in body and mind. Short of that, you can only wallow. And Carter wrote this three decades before we knew of endless scroll and IG filters. 

He evidently didn't know that people could hear an urging to rescue our living world since it's our only possible habitat and shrug: well, we can play out our days on Zoom and Slack. And he may not have reckoned that holing up in an air-conditioned den, presuming you can afford one, feels like a pretty measured step down from burrowing around office complexes and malls. 

Yet Carter offers a spotlight into the path to capital's highest and best use today. Note that he never says happiness comes from sustaining nature. Again, he equates sustaining nature with the pursuit of happiness. 

So investment themes over the long term, as the IRA gooses capital for them, pop out in this logic.  I see this most brightly in four minor provisions, but you could read it into any title in the text. For our time together now, ponder how the Investment Reduction Act builds these incentives:

• It offers competitive grants for forest management.
• It ponies $4 billion for home improvements and $200 million for state programs to train home contractors.
• It sets aside transmission grants, loans and funds for studies.
• And it dedicates $550 million for drought preparedness and resilience in underserved areas.

Picture where this lands in 2063. Imagine investing in making homes less prone to cause sickness. Or picture seeding companies that train unemployed people as contractors. Or see yourself levering some of the $550 million available for supporting low-income communities' bulwarks against flood and drought. Alternatively, make yourself expert in delivering solar and wind projects at compact scale with relatively few environmental harms in low-income communities. All along, you are pursuing health and livelihood, which matches happiness to a first approximation. 

As we prepare to leave 1981, consider that "pursuit" and "investing" run along the same track: they involve dedicating attention and resources now to something you'll enjoy later. President Carter's insight holds that you enjoy the most productive pursuit when you invest in a real world that holds out the light of future real-world investments to come.