(2019-03-23) Guinn Free Range Kids Free Range Capitalism

Rusty Guinn on Free-Range Kids / Free-Range Capitalism. One of our jobs is to protect our kids. But they must be more than safe to become men-in-full. (Man In Full)

For this reason, I am a big fan of Let Grow and the Free Range Kids movement

we don’t believe in free-range kids just because a safer world means we can. We believe in it because we should. In other words, we think there are important developmental, psychological, civic and philosophical reasons to walk away from constant close supervision of our children. In doing so, we express a belief that freedom from excessive guidance promotes the development of intellectual autonomy. Of adaptivity to changing circumstances. Of self-worth. Of enduring challenges, disagreement and difficulty. Of hearing and seeing disagreeable things without being drawn in or repelled by them in counterproductive ways. Of a rock-solid belief in the autonomy, sovereignty and value of others.

It is this cause that gives me pause, not only about our kids, but about us – about investors

The transformation of capital markets into political utilities isn’t just similar to helicopter parenting. It IS helicopter parenting.

Capitalism made us wealthier and more productive in part because we allowed bad ideas to fail.

in the aggregate, a lot of companies telling you their opportunities to reinvest cash in R&D, factories, employees and new distribution markets aren’t amazing is…less good.

What worries me is that when this Zeitgeist has grown up, when we’re all done being helicopter-parented by policymakers, we will all be crippled as investors – capable of and conditioned to allocate among asset classes which no longer have the same meaning they once did (e.g. Emerging markets), trained in the art of using shoddy empirical techniques to validate our dispositions (e.g. all you need is US Large Cap!), skilled in the assessment of which Culturally Important Institution policymakers need to leverage asset prices to protect, and utterly incapable of determining whether we should provide capital to a business or government venture, and under what terms.

For example, for most companies, the return of capital to investors through buybacks is perfectly rational.