My WSJ op-ed on unhappy Sarbox anniversary, Speaking in Austin on CBDCs, & other highlights
My writings on shorting ESGs, George Washington on trade & administrative state, & musicianship in my "blood" ; Oct. 10 keynote at Infin MoneyTrends conference in Austin
It may seem like summer has been over awhile, but the first official day of fall only fell about 10 days ago. Hope all of you — my Substack VIPs — had a great summer and are enjoying some beautiful first days of Autumn! Since I have been lax of late in posting Substack updates, here are some of my policy and writing highlights from late summer heading into fall.
My WSJ op-ed on Sarbanes-Oxley’s long winter
On July 28, I wrote an op-ed for the Wall Street Journal on the unhappy 20th anniversary of Sarbanes-Oxley. This law, enacted in response to the Enron and WorldCom scandals in the summer of 2002, has created a very long winter for startup entrepreneurs seeking funds to grow their businesses outside of key venture capital cities and for investors trying to build wealth with the dwindling number of smaller public companies.
As I wrote in the piece, “Twenty years later, legitimate entrepreneurs and ordinary investors are punished by the law’s costly mandates. Sarbanes-Oxley has permanently altered the landscape of business growth and development.” On top of this, the law by many measures has failed to achieve its key objective of preventing corporate fraud. It failed to catch the mortgage shenanigans that led to the 2008 financial crisis, and its focus on trivial minutiae “misses the really big risks.”
My Economic Standard piece on shorting ESG firms
While burdensome mandates like Sarbanes-Oxley haven’t been shown to catch corporate shenanigans, there is a time tested market process that has a solid record of doing so: short-selling campaigns. One of the first warnings of accounting fraud at Enron came from short-seller Jim Chanos. So as I noted in a recent blog for CEI.org that was reposted as an article in the Economic Standard, it’s very much of interest that today some prominent shorts — including Chanos — are sounding the alarms on companies in the “green” sectors of solar and renewables that are so favored by ESG (a term which comprises an arbitrary measure of Environmental, Social, and Governance) proponents.
In the blog I noted that Carson Block — who heads Muddy Waters Capital and exposed accounting irregularities and fraud at Chinese companies that have since been delisted from U.S. exchanges — has announced short positions in the solar company Sunrun, one of the leading providers or residential solar energy systems, and Hannon Armstrong Sustainable Infrastructure Capital, which provides capital and services to the renewable energy industry. He argues that with these companies and potentially others, ESG mania today is causing both market participants and government regulators to overlook what he says are serious flaws in some “green” companies’ business and accounting practices. Chanos has amplified the critique of Sunrun in a series of tweets, pointing to what he sees as “the overvaluation of the leased [solar] systems by appraisers.” My piece got a lot of attention when Block tweeted it out to his more than 225,000 followers, and Chanos joined in the thread.
My book, George Washington, Entrepreneur — GW on trade & administrative state
I continue to write about and discuss my book — George Washington, Entrepreneur in various venues, as George Washington’s triumphs and obstacles as an innovative entrepreneur informed his politics and policy and should inform ours. In my last Substack post, I gave a preview of my article in Law & Liberty on how the recent Fifth Circuit Jarkesy v. SEC decision limiting the power of juryless administrative quasi-courts advances the stated desires of Washington and the Founding Fathers for due process, trial by jury, and separation of powers in the new nation. Here is the link to the article that ran on July 4. I also had the pleasure on Independence Day of talking about this issue and my book on the morning radio show “O’Connor & Company” — with Julie Gunlock and guest host Andrew Langer — on WMAL radio in DC, and with host Steve Lance on “Capitol Report” on the NTD cable and streaming network. Here is a clip of the latter program.
In late September, my colleague Iain Murray — Vice President for Strategy & Senior Fellow at CEI — cited my book in an excellent blog he wrote for CEI.org on the Founding Fathers’ frustration with British mercantilism and how that should inform the trade debate today. As Iain also notes and as I have written in my book, Washington and other Founding Fathers also read Adam Smith’s critique of mercantilism and protectionism in the Wealth of Nations, published in the year of the American Revolution in 1776.
Upcoming Speech — October 10 Keynote at Infin MoneyTrends in Austin
I will be giving the Regulatory Keynote speech at the Infin MoneyTrends conference in Austin on October 10. The title of my presentation is “FedCoin, FedNow, and FedAccounts: Threats to Consumer Financial Services from Federal Solutions in Search of a Problem.” I will be talking about the dangers of central bank digital currency (CBDC) and similar existing and proposed federal financial intrusions such as FedNow and FedAccounts to privacy and private-sector innovation (Here’s an op-ed I wrote about the topic earlier this year for USA Today.) I go on just before Sen. Bill Hagerty (R-TN) gives the Congressional Keynote at the summit.
The MoneyTrends conference will feature many great speakers, as well as cutting-edge entrepreneurs and innovators among the attendees. If you’re in Austin the week of the 10th and wish to see my presentation and other great sessions of this conference, here is more info on the event.
Musical note — Music In My Blood
I notice a lot of folks end their Substack posts with a music clip, and that is what I’m going to try to do from now on. I have written some on music, and I love to bring pleasure to my friends by sharing some good tunes and melodies, and information about such that people may find useful. In this entry, I am going to share some exciting info about musicianship in my own family!
Last weekend, I made my first trip to the Dakotas when I took a road trip with family from my hometown Kansas City — where I was visiting — to Sioux Falls, SD, to see my cousin Mike Berlau be inducted into the South Dakota Rock & Rollers Hall of Fame along with the band in which he was drummer: Spider and the Crabs. It was an exciting ceremony on September 24 with some prominent South Dakotans attending, including First Gentleman of the state Bryon Noem. It turns out the band had already been inducted into the Kansas Music Hall of Fame. Apparently there are also rock’n’roll halls of fame in Iowa, Nebraska, Alabama, and probably plenty of other states. I never realized until now that these state halls of fame were a thing!
Anyway, I couldn’t be more proud of Mike, my dad’s first cousin and a great friend! Mike had left the band by the time I was born, and has had a successful career as a financial services executive and professional in the KC area. But he never gave up his passion for music and still plays the drums as well as the guitar. Here is a clip of Mike and the reunited band playing at the Kansas Music Hall of Fame ceremony in 2006. Unfortunately, this is the only clip of the band playing on YouTube, even though it was popular throughout the Midwest region in the ‘60s and opened a national tour for the Righteous Brothers. Spider and the Crabs was also one of the first rock — as opposed to R&B — bands to have a small, tight horn section, and may have influenced bands like Chicago who would later feature a similar instrumental lineup (This claim of influence is made in this article and elsewhere online, and I plan to do further research for verification). Hopefully, these state Hall of Fame inductions will generate some interest and we will see more of their older recordings put in an accessible format. Below is a Tweet thread I posted on the ceremony.
All best until my next Substack post!
John Berlau
Senior Fellow & Director of Finance Policy
Competitive Enterprise Institute202-331-2272 - Phone
202-415-3192 - Cell
https://www.cei.org
Author of George Washington, Entrepreneur (St. Martin’s)
Follow me on Twitter