Tennessee is famous for America’s first radio show: the Nashville-based Grand Ole Opry. And for its Tennessee whiskey. And for the Alamo defender Davy Crockett. And, of course, for Elvis Presley. I’ve tasted the whiskey, visited the Alamo, and checked out the famous Memphis studio where Elvis’s career was launched. I encourage others to do so, too.
Tennessee was the birthplace of America’s first female Senator. Sen. Hattie Caraway was born in TN. She was America’s first woman to be elected and re-elected to the United States Senate. She represented Arkansas. See https://en.wikipedia.org/wiki/Hattie_Wyatt_Caraway).
Tennessee’s Great Smoky Mountain National Park (https://www.nps.gov/grsm/index.htm) is the nation’s most-visited park, with double the number of visitors of Yosemite (https://www.nps.gov/yose/index.htm) — about 20 million in the Covid year of 2020. I’ve hiked in both of these parks and encourage others to do so.
A Memphian entertainer named Danny Thomas (https://en.wikipedia.org/wiki/Danny_Thomas) made the St. Jude’s Children’s Hospital (https://www.stjude.org/about-st-jude/history.html) world famous.
And, also in Memphis, you can find Billy Bass in all its glory at the famous pyramid (https://www.memphistravel.com/trip-ideas/bass-pro-pyramid-memphis) and its massive fishing store next to the bridge that crosses the river to Arkansas. I have visited the store and encourage others to do so.
Memphis houses the National Civil Rights Museum, at the site where Martin Luther King was shot(https://en.wikipedia.org/wiki/National_Civil_Rights_Museum). I have visited the museum and encourage others to do so.
And then there is the legislature of Tennessee.
Unless you’ve been away from Planet Earth, by now you have heard all sides of the legislative session and the suspension or reinstatement of legislators, or however you want to characterize it (https://apnews.com/article/tennessee-lawmakers-expulsion-d3f40559c56a051eec49e416a7b5dade,https://www.politico.com/news/2023/04/12/second-tennessee-state-lawmaker-reinstated-00091715). This is the Tennessee legislature at work. We will let readers decide for themselves which side of which argument they want to take about the behavior in the Tennessee legislature.
Markets ignored this activity. The financial ratings of various bond issues were unchanged. The credit rating of the state didn’t budge. Stock prices of companies that do business in Tennessee didn’t change materially. And if they did, it wasn’t because of the antics of Tennessee politicians. Stock prices change because interest rates change or economics change or corporate earnings change.
Tennessee’s political antics were and are certainly not market-moving events.
There’s some history about the Tennessee standard of governance. Although it’s not taught now as frequently as it was in yesteryear, Tennessee is the home of the famous Scopes trial. Here’s a link to tell you that story: https://www.history.com/topics/roaring-twenties/scopes-trial. With history as your guide, readers may start to form their opinion of Tennessee when it comes to the actions of its government.
Let’s add to that history with this snippet. Tennessee is reputed to be one of several states (Oklahoma and Alabama among them) that have tried to legislate the rounding of pi to three digits. “The children will do better in school,” said one of the legislators, according to an urban legend. Here’s the real story, as reported by a fact-checking source: “The Eccentric Crank Who Tried To Legislate The Value Of Pi,” https://gizmodo.com/the-eccentric-crank-who-tried-to-legislate-the-value-of-5880792. The perpetrator of this foolishness was one Dr. Edwin J. Goodwin, of Solitude, Indiana, who actually succeeded in getting the House of Representatives of that state to pass a bill, by a vote of 67-0, approving Goodwin’s solution to the age-old mathematical problem of squaring the circle, which required the novel value of 3.2 for pi. (And on various occasions and to suit the demands of this or that proof, Goodwin came up with at least nine different values for pi, ranging from 3 to 9.2376...). The good doctor’s house of cards came crashing down when the bill moved to the Senate and came to the attention of Prof. Clarence Abiathar Waldo, chair of the mathematics department at Purdue and president of the Indiana Academy of Science. Prof. Waldo wasted no time in educating a few key senators on the fundamentally irrational (and immutable) nature of pi, and the bill was more or less laughed out of the Senate. (Mathematicians know that there is no limit to the number of digits it takes to compute pi. Various computing efforts have extended the number into the trillions, though we’re not quite sure why they bothered.)
So, one must ask, why has the urban legend stuck to Tennessee? Perhaps the current legislature will get around to explaining that one, as they seek to justify their recent actions.
It’s too bad that the legislators in TN and certain other states haven’t studied their history. Time will tell what their constituents think of their behavior. In my opinion, markets will continue to ignore these things until market agents decide that governance (the G in ESG) is important enough that it requires a different market-pricing structure where G is failing at the hands of governments.
Fortunately, my family, friends, and professional colleagues who are Tennesseans know that pi doesn’t round to 3 and that legislators are best at their jobs when they are debating issues for the common good of constituents rather than engaging in the bullying or punishment of anyone who might disagree with them.
History professor Heather Cox Richardson has this interesting snippet about a Tennessee politician:
The speaker of the Tennessee House of Representatives … is also in trouble. Cameron Sexton is living in Nashville rather than the district he represents. Sexton apparently bought a $600,000 home in Nashville and hid that purchase, keeping his name off the documents and keeping his wife’s signature obscure. He has argued that he could legally continue to represent Crossville, his alleged place of residence, because so long as he has a “definite intention of returning,” Tennessee law okays lawmakers living elsewhere. But the purchase of a $600,000 home in Nashville seems like a pretty permanent abandonment of Crossville. Sexton has been drawing $313 a day to commute back to his district while he is not, in fact, commuting back to his district. Since 2021, he has claimed $92,071 in expenses, likely enough to cover his mortgage.
For more on this story, see “Where does the Tennessee House Speaker actually live?” https://tntribune.com/where-does-the-tennessee-house-speaker-actually-live/.
Tennessee is one of the 19 states participating in the anti-ESG policy statement spearheaded by Florida governor DeSantis. Here’s the link to the policy statement: https://www.flgov.com/wp-content/uploads/2023/03/Joint-Governors-Policy-Statement-on-ESG-3.16.2023.pdf. Florida’s legislature has approved a bill to ban ESG municipal bonds. Desantis is likely to sign it. Go figure that one out!
We’ll end with a stirring tale about Tennessee Volunteers quarterback Joshua Dobbs, who rattled off 48 digits of pi on Pi Day, March 14, 2015 (a date chosen to match pi’s initial digits, 3.14), thus avoiding an ignominious, though admittedly tasty, fate. See “Reporter Gets Pied After Tennessee QB Joshua Dobbs Names 48 Digits in Pi,” https://bleacherreport.com/articles/2396716-tennessee-qb-josh-dobbs-pies-reporter-in-face-after-he-names-48-digits-in-pi.
In Tennessee and elsewhere, the lesson is the same: Good governance has to reckon with reality. The mathematical relationship between the circumference and the diameter of a circle is immutable. You can’t round pi just because you want to; you can’t legitimately claim commuting costs for imaginary miles you don’t drive to a home you don’t live in just because you want to; and you can’t make ESG irrelevant to investing just because you want to.
David R. Kotok
Chairman & Chief Investment Officer
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