The Mayor White Problem for Investors

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Dear fellow investors,

While reading Jeff Nussbaum’s new book Undelivered, I came across the story of Boston’s Mayor Kevin White and the 1974 busing of Boston public school students. As a millennial, busing is something I have heard of and never had to experience personally. The story was very telling.

Busing was a theory pushed in the 1970s to fix the inequalities that were seen after the civil rights movements of the 1960s. White neighborhoods were white and black neighborhoods were black and unlikely to make in-roads between those communities. The theory was that if you would integrate the children, these stark community contrasts would change. Let me highlight those ideas like open enrollment, where a child in Boston could enroll at whatever Boston public school he or she would like, was not the principal at hand. It was telling the child that they had to be bussed to another community in this grand social experiment.

The city of Boston had experienced its first two days of court-mandated busing to integrate the city’s schools the week prior. In the initial phase of busing, ordered by district court judge Arthur Garrity, white students would be bused from South Boston to integrate predominantly Black Roxbury, and Black students would make the opposite trip to integrate predominantly white South Boston. The first two days had not gone well; chaos ruled, several buses had been damaged, and six student and one police officer had been injured. Now the word on the street was that on Monday of the first full week of school (later that very morning), Boston’s notorious Irish American Mullen Gang intended to co-opt a planned anti-busing march and get violent, potentially even trying to shoot and kill black students.

This was a very dark hour in the history of the city of Boston. Ideological lines ran everywhere. Caught in the middle of this storm were innocent children. Boston Mayor Kevin White had decisions to make. He couldn’t violate a judge’s order but hated the idea of forcing policies down on families. Investors may feel some of Mayor White’s problems today.

The old proverb says that the road to hell is paved with good intentions. The same could be said of the predicament that Mayor White found himself in 1974. It is our opinion at Smead Capital Management that what has transpired via ESG mandates in the economy of the world is very similar. Ideological thinking has run amok in the allocation of capital. This has transpired from government edicts and will, a typical creator of a bubble. It is promoted by the promoters, who are another element of bubbles. Their love child is what we now refer to in the investment business as ESG.

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