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Noam Chomsky on the concentration of wealth and its consequences

concentration of wealthRequiem for the American Dream: The 10 Principles of Concentration of Wealth & Power, by Noam Chomsky

@@@@@ (4 out of 5)

For decades, economic scholars have commented on the dangers inherent in the growing concentration of wealth in Western society. Though misleadingly referred to as “income inequality” in the new media, this critically important topic actively entered public debate in 2011 with Occupy Wall Street. Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman and others added to the debate in the years that followed. Then, Senator Bernie Sanders flogged the issue at every opportunity in his presidential race in 2016, giving the issue further prominence. If there’s anyone alive and alert in America today who isn’t aware that the concentration of wealth is a growing problem for our society, I’d be surprised.

Few contemporary American observers have a clearer-headed understanding of the issue and its causes than Noam Chomsky. Chomsky, born in 1928, is widely regarded as the father of modern linguistics and one of the founders of the field of cognitive science. He’s also well known—some might say notorious—as an activist and social commentator. He has written dozens of books on the technical aspects of his academic work, and even more on politics. But his latest, Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power, is not a book he wrote.

Instead, the book was distilled from a 2015 film of the same name, a documentary patched together using interviews filmed over four years with Chomsky. Unlike the books he has written, most of which are slow going and many (the texts on linguistics, impenetrable), Requiem consists entirely of transcriptions from the spoken word. The style is conversational and uses only a bare minimum of jargon. It’s a quick read, and an enlightening one.

As Chomsky notes, “Power has become so concentrated that not only are the banks ‘too big to fail,’ but as one economist put it, they are also ‘too big to jail.'” Given our experience over the past decade, it would be difficult to argue with that. And anyone who closely follows events in American society today would say the same about this observation by Chomsky: “the rich and powerful, they don’t want a capitalist system. They want to be able to run to the ‘nanny state’ as soon as they’re in trouble, and get bailed out by the taxpayer.” If the American people fully understood how much tax money is funneled to corporations as subsidies, and how much the tax code has been distorted to favor them and their shareholders, they would storm Washington DC by the millions.

In Requiem, Chomsky presents ten “principles” that together explain how the massive concentration of wealth in America today has come about. (His analysis applies to other wealthy countries as well, but it fits the U.S. best.) His argument is best summed up as what he calls a vicious circle: “Concentration of wealth yields concentration of power, particularly so as the cost of elections skyrockets, which forces the political parties even more deeply into the pockets of major corporations.”

The 10 principles underlying this reality, as Chomsky sees them, are:

  1. Reduce Democracy
  2. Shape Ideology
  3. Redesign the Economy
  4. Shift the Burden
  5. Attack Solidarity
  6. Run the Regulators
  7. Engineer Elections
  8. Keep the Rabble in Line
  9. Manufacture Consent
  10. Marginalize the Population

I’ve never seen a more comprehensive or economical explanation of how wealth has come to be so concentrated in so few hands in the U.S. today. Most of these principles are self-evident at a glance. Only two may require explanation. Chomsky uses the word “solidarity” as a synonym for empathy, caring for others, or “concern for your fellow man,” to cite another archaic expression. His Principle #8, “Keep the Rabble in Line,” refers to the coordinated 45-year effort by Big Business and Right-Wing ideologues to destroy the labor movement.

The editors of Requiem—Peter Hutchison, Kelly Nyks, and Jared P. Scott—have interspersed short passages from other sources among the 10 Principles. The sources range over the centuries: from Aristotle and James Madison to Harry Truman and Martin Luther King Jr. These short excerpts from classic documents, speeches, press reports, and social commentaries add depth to the book’s presentation and enhance understanding of Chomsky’s message.

Chomsky’s views have often been regarded as extreme. Certainly, he is vilified by commentators and scholars on the Right. But if you read Requiem for the American Dream, I think you’ll find his reading of history is accurate, his logic is sound, and his view of America today is—sadly—right on target.

Donna Leon’s latest is not “one of her best”

donna leonEarthly Remains (Commissario Brunetti #26), by Donna Leon

@@ (2 out of 5)

For some reason I cannot fathom, Marilyn Stasio raved about Earthly Remains. Stasio has been editing a column on crime fiction for the New York Times Book Review—forever, it seems. Her recommendations are often good. But this one wasn’t. She called this novel, the 26th in Donna Leon’s long-running Commissario Brunetti series, “one of her best.” I don’t agree.

Though there is a mystery underlying the action in Earthly Remains, it doesn’t even begin to surface until one-third of the way into the novel. And the investigation undertaken by Commissario Brunetti isn’t undertaken in earnest until more than two-thirds of the way.

Many of Leon’s signature themes are prominent in this curious book. She rhapsodizes about Venice, the surrounding communities, and the Laguna Veneta, the extension of the Adriatic Sea on which the islands of the city are located. In Earthly Remains, the romance of the Laguna comes in for special praise. Predictably, too, the corruption rampant in Italian society emerges clearly in the story. Brunetti’s boss, Vice-Questore Patta, is, as always, obsequious with authority and disdainful of those who report to him. If anyone in a position of power in Venice is under investigation by Brunetti or his colleagues, Patta will surely intervene in the suspect’s favor. And, once the plot of the novel finally becomes clear, Leon spotlights the illegal activity that has helped to poison the Laguna and surrounding territory. In Donna Leon’s Italy, corruption engulfs business as well as government, the police, and the Church.

One of Leon’s bad writing habits is to describe action in excruciating detail. I have no idea whether she picked up the habit writing for magazines that pay by the word, but Earthly Remains and many of her other novels read that way. Here’s a representative example from one of the first pages in the novel: “Brunetti had apologized for the heat in the room, explaining that the ongoing heatwave had forced the Questura to choose between using its reduced supply of energy for the computers or for air conditioning and had chosen the former. Ruggieri had been gracious and had said only that he’d remove his jacket if he might. Brunetti, who kept his jacket on, had begun by making it amply clear . . .” That was 68 words. How many words do you think Elmore Leonard might have used to convey the essential information in that passage? In fact, is there any essential information there?

If you are a die-hard Donna Leon fan, you might want to read Earthly Remains. If you’re not, be forewarned: not a lot happens in this novel. It’s very slow going.

March 7, 2017

Uber, Airbnb, and the sharing economy

sharing economyThe Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World, by Brad Stone

@@@@@ (5 out of 5)

Many Americans, not to mention millions of people in other countries around the world, may find it difficult to imagine a world without Uber or Airbnb. Yet Uber was founded only in 2009 and Airbnb a year earlier. (Neither company’s success—or, for that matter, the sharing economy as a whole—would have been possible without the iPhone, which Apple introduced in 2007.) As the cover graphic suggests on Brad Stone’s captivating new book, The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World, these two iconic companies have been riding the wave of new and ever-improving technology.

Is this the sharing economy?

“Airbnb and Uber didn’t spawn ‘the sharing economy,'” Stone writes, “. . . so much as usher in a new trust economy, helping regular folks to negotiate transportation and accommodations in the age of ubiquitous internet access.” Even before going public, the two companies together were valued at close to $100 billion. There is no evidence that their principals have shared any appreciable portion of that wealth. Nor does it seem consistent with a gentle label such as “the sharing economy” for Uber to resist every effort to classify its drivers as employees and provide them with benefits.

Stone contends that “Together, these companies have come to embody a new business code that has forced local governments to question their faithfulness to the regulatory regimes of the past.” In the course of doing so, both companies have engaged in bare-knuckle fights with local governments around the world. For the most part, they’ve won. But not always. Stone tells the fascinating story, blow by blow.

The five men behind the two companies’ rise

Stone’s book is tightly focused on Uber and Airbnb, with digressions about the many companies that have tried to compete with them, with only meager success for the most part. In fact, in a sense, the book is about the two companies’ cofounders, and especially the two young men who have emerged as CEOs. Travis Kalanick runs Uber. Brian Chesky is at the helm at Airbnb. However, the two companies’ success may well be due as much to the contributions of their cofounders: Garrett Camp in the case of Uber, and Joe Gebbia and Nathan Blecharczyk in the case of Airbnb. All are featured in Stone’s account. They’re all billionaires now, many times over.

The trouble with Uber and Airbnb

Stone makes clear that many of the problems that have surfaced in the news media about Uber have been caused by its CEO. “Chronically combative” (and sometimes abusive), Travis Kalanick continues to generate negative publicity, seemingly on almost a daily basis. Here’s one recent example that emerged in The Guardian—an article about Kalanick’s abusive treatment of one of his company’s drivers. And here’s an even more recent report about the company’s use of software to evade police in  at least five American cities and six other countries. These are not isolated instances of controversy surrounding the company: trouble seems to follow Uber with disturbing regularity.

Many of these reports reflect Kalanick’s combative personality, but there are other problems as well. For instance, Anna Weiner wrote in the Feb. 28, 2017 New Yorker about recent reports of sexual harassment at the company: “Uber is, in some ways, a model villain. The company has long inspired Schadenfreude. It has been accused of mishandling customer reports of sexual harassment by drivers.”

A shared reputation for aggression

As a result of the frequent, high-profile accounts of Uber’s misbehavior, Airbnb tends to be regarded more highly. But Stone argues that CEO Brian Chesky is frequently as aggressive as Kalanick. Neither has shied away from blatantly breaking local laws or confronting local officials. “Reflecting on the years 2011 through 2013,” Stone notes, “a person might find it difficult to conclude that one company was the more ethical operator . . . Both CEOs seized the tremendous opportunities before them with steely determination, pausing just long enough to turn around the repair some of the carnage they left in their wake.” Stone adds, “in the end, there emerged an unavoidable fact: Chesky was every bit the warrior Travis Kalanick was. He believed so much in the promise of his company that he was going to fight for every inch of territory.” Both companies racked up so many victories against local officials because their services had come to be regarded as essential by so many residents—and the high-priced lobbyists they both hired managed to mobilize so much support that local officials were forced to back down.

A final assessment

After cataloguing a litany of offenses by both companies, Stone relents in the end. “Both Travis Kalanick and Brian Chesky had made big promises: to eliminate traffic, improve the livability of our cities, and give people more time and more authentic experiences. If these promises are kept, the results might well be worth the mishaps and mistakes that occurred during their journeys; perhaps they’ll even be worth the enormous price paid by the disrupted.” Not to mention that $100 billion the two companies’ founders and investors have amassed.

About the author

Brad Stone is a senior executive at Bloomberg News in San Francisco. The Upstarts is his third nonfiction book. The second was the bestseller The Everything Store about founder Jeff Bezos and the rise of Amazon.com. I reviewed that book here under the title “Why I hate Amazon.com.”

 

January 10, 2017

A true story of high finance and murder in Putin’s Russia

Putin's RussiaRed Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice, by Bill Browder

@@@@@ (5 out of 5)

Even if you follow international news only casually, you’re likely to be aware that Putin’s Russia is a kleptocracy. The country is effectively governed by fewer than two dozen oligarchs. Some, including President Vladimir Putin himself, hold government office. Others are private “bankers” and “businessmen.” Together, they have looted hundreds of billions of dollars, plundering Russia’s oil and gas reserves and buying up government enterprises at pennies on the dollar in a corrupt process of privatization.

The truth about Putin’s Russia

Putin alone is reported to have amassed a fortune of at least $40 billion. Other observers consider him the richest man in the world, with assets totaling more than $100 billion. Though from time to time we’ve also read reports about the murder of whistle-blowers, investigative journalists, and opposition politicians, these fragmentary reports don’t make clear just ruthless and brazen the rulers of Putin’s Russia have shown themselves to be

Russian-American journalist Masha Geffen’s expose, The Man Without a Face, gave us insight into the rise of Putin himself. Now comes Red Notice, Bill Browder‘s lucid memoir of nearly two decades’ involvement in the Russian financial markets. Through painful personal experience, Browder bore witness to the violence and other criminal behavior that built the great fortunes at the top of Russia’s economic pyramid today.

An investment adviser turns civil rights activist

Red Notice encompasses two stories. First is the remarkable tale of how Browder made a fortune through investments in Russia in the 1990s and early 2000s. Second is the story of how quickly his business, his life, and his colleagues’ lives began falling apart once Browder ran afoul of Vladimir Putin. He began his career as an investment adviser. He ended it as a civil rights activist.

Browder is a remarkable figure in his own right. His grandfather was Earl Browder, who headed the US Communist Party during the 1930s and 40s and twice ran for President on its ticket. Other members of his family, including his father, two uncles, and his brother, are not just progressive politically but prodigies in science and math as well. They hold distinguished professorships in their fields at top universities. (“In my family,” Browder writes, “if you weren’t a prodigy, then you had no place on earth.”) Bill Browder himself rebelled against his family from an early age, resolving to do the one thing that would most upset his family: become a capitalist. And so he did, earning an MBA from Stanford and going to work for the investment bank Salomon Brothers and later as a consultant with the Boston Consulting Group.

Making billions from privatization

Browder’s interest in Eastern Europe soon got him involved in some of the very first privatizations in that region. Later, having proven his ability to pick wise investments in Poland and elsewhere in the region, he founded his own firm in Moscow, Hermitage Capital Management. With substantial funds from Israeli and American investors, Browder quickly built Hermitage into “the best-performing emerging-markets fund in the world” in 2000. By the early years of this century, the firm held $4.5 billion in assets. It had been started only in 1996 with $25 million. Browder made all this money taking great risks with large investments in what appeared to be sure-fire 50- or 100-to-1 payoffs as the Russian privatization program proceeded. He turned out to be right again and again.

This process of privatization lay the foundation for many of today’s great fortunes in Russia. “Instead of 150 million Russians sharing the spoils of mass privatization,” which had been the alleged purpose of the program, “Russia wound up with twenty-two oligarchs owning 39 percent of the economy and everyone else living in poverty. . . [B]y the year 2000 the richest person had become 250,000 times richer than the poorest person.” This is not the way business works in most of the rest of the world. It’s criminality, pure and simple. It may be unkind to point out that Browder might well have been one of these oligarchs had he been Russian. The fortune he built was considerable.

From Putin’s favor to criminal charges

Once Browder ran afoul of Putin and his cronies, the full might of the Russian government began mobilizing to ruin him. Police official raided not just his offices but those of his lawyers as well on the basis of trumped-up charges. Criminals literally stole three of his companies by forging documents and filing them in obscure provincial courts. Bogus complaints were lodged against Browder and his lawyers for tax evasion, beginning a years-long saga which ended when criminals engineered the theft of $230 million from the Russian government—the same amount Browder’s firm had actually paid in taxes! But all this legal maneuvering was only the beginning. During these times, Browder successfully moved all his assets out of Russia and out of reach. When the criminals realized there was nothing to steal, the threats escalated. Browder then managed to extract two of his principal lawyers from the country before they could be jailed and tortured. A third, Sergei Magnitsky, was not so lucky.

Much of Red Notice is about Bill Browder’s years-long effort to gain Magnitsky’s freedom. When he failed, and Magnitsky eventually died before the age of 40 from torture, medical neglect, and a vicious beating by guards when he was deathly ill, Browder became virtually a full-time civil rights activist. It was in large part through his efforts that the US government eventually took action against the 60 individuals who had taken part in the illegal jailing, torture, medical neglect, and murder of Sergei Magnitsky. With help from several remarkable government officials, he even managed to persuade a very reluctant Obama Administration to issue sanctions personally directed at the 60. Their vehicle was the Magnitsky Act of 2012, which Browder was instrumental in passing. It’s a truly moving and remarkable tale.

November 29, 2016

The penny press, Amos ‘n Andy, and pop-up ads

pop-up adsThe Attention Merchants: The Epic Scramble to Get Inside Our Heads, by Tim Wu

@@@@@ (5 out of 5)

If you’ve been paying attention, you can’t have missed the changes in the character of advertising over the course of your life. Certainly, I have. Chances are, you were born in the age of radio, at the earliest. If so, you’ve witnessed a string of new technologies enter the realm of news and entertainment, almost always paired with aggressive advertising sooner or later: network television, cable TV, the personal computer, the Internet, and the smartphone.

In his insightful history of the business of advertising, Columbia University law professor Tim Wu casts a wider net. Beginning with the advent of the penny press in the 1830s, he explores in telling detail the now centuries-long battle between the commercial interests who want to seize our attention for their own ends and the individuals who want to keep our lives private and access news, information, and entertainment without distraction. This is a colorful story, and Wu tells it well.

Though Wu opens with the introduction of the Sun in New York in 1833, his history more properly begins much later in the 19th century with the emergence of the advertising industry to sell Snake Oil and other patent medicines. (Yes, Snake Oil Liniment was actually a widely sold product Good for Man and Beast.) “From the 1890s thr0ugh the 1920s,” he writes, “there arose the first means for harvesting attention on a mass scale and directing it for commercial effect . . . [A]dvertising was the conversion engine that, with astonishing efficiency, turned the cash crop of attention into an industrial commodity.”

The penny press, Amos ‘n Andy, and pop-up ads

Beginning in the early years of the 20th century, Wu frames his story around the development of radio and the four “screens” that have dominated our attention over the decades that followed: the “silver” screen (film), television, the personal computer, and the smartphone. The author relates the history of each of these technologies as a human story, describing the often outrageous personalities who pioneered and dominated each of these media in turn. However, in focusing on radio and the four screens, Wu overlooks the billboards that mar every urban line of sight and barely mentions the direct mail that floods our mailboxes. Though less than comprehensive, his historical account is engrossing and enlightening.

Here you’ll learn about the development of propaganda by the British government in World War I and its perfection by Nazi Germany . . . the first radio serial that was a smash hit (the grossly racist “Amos ‘n Andy“) in the 1920s . . . the invention of the soap opera in the 1930s . . . the battle between the networks on radio and later on TV from the 1930s through the 1990s . . . the development of geodemographic targeting for ads in the 1970s . . . the emergence of celebrity culture in the 1980s and its perversion by reality television in the 2000s . . . the wild proliferation of blogging in the 2000s . . . the identity theft committed by Google and Facebook in the 2000s and beyond . . . and, finally, “unplugging” and the emergence of free online streaming services like Netflix in the 2010s. This is not a pretty story.

A harsh judgment

The author is not a fan of the “new media” that have come to hold our attention in recent years. “The idealists had hoped the web would be different,” he notes, “and it certainly was for a time, but over the long term it would become something of a 99-cent store, if not an outright cesspool.” Similarly, Wu’s judgment about the advertising industry is harsh. “[U]nder competition, the race will naturally run to the bottom; attention will almost invariably gravitate to the more garish, lurid, outrageous alternative . . .” It’s difficult to find fault with any of this.

About the author

He’s the man who coined the term “network neutrality.” A specialist in media and technology, Tim Wu has written several books and numerous articles, all nonfiction. His work has influenced the development of national media policy under the Obama Administration.

 

 

29 good books about business history

business historyHaving spent more than half of my life in business, engaged in founding or leading a number of small companies, it’s only natural that I should read a good deal about economic history and the history of business. Here, I’ve listed 29 of the best books about the history of business that I’ve read and reviewed in this decade. They’re all nonfiction. I’ve divided them somewhat arbitrarily into four categories: company histories, innovation, finance, and business & society. If you have even a passing interest in the broad subject of business, you’re sure to find at least few books here that will prove rewarding.

Each title is linked to the full review I’ve posted here over the years. I’ve listed titles in no particular order within each category. In each category I’ve identified my favorite, but don’t be misled: every one of the books listed here was compelling.

Company histories

Of the 10 books listed below, the one that impressed me the most was Gabriel Sherman’s The Loudest Voice in the Room, a biography of Roger Ailes, the uncompromising Republican activist who founded and ran Fox News for 20 years.

Ice Cream Social: The Struggle for the Soul of Ben & Jerry’s, by Brad Edmondson

Here is the inside story of one of America’s most iconic companies: Ben & Jerry’s. As Brad Edmondson reveals, the model for socially responsible business wasn’t always on track to place the welfare of its employees, its customers, and the community above the interests of shareholders. There were bumps along the way.

The Fish That Ate the Whale: The Life and Times of America’s Banana King, by Rich Cohen

The astounding-but-true tale of how a penniless Eastern European immigrant founded the United Fruit Company, helped engineer the murder of the President of Guatemala, and became one of the richest men in the world. It was Samuel Zemurray whose efforts shaped the history several of what came to be called “banana republics.”

The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News — and Divided a Country, by Gabriel Sherman

If any one person was most responsible for today’s divisive politics in America — and for the rise of the Tea Party and Donald Trump — it’s Roger Ailes. As the longtime chairman of Fox News, Ailes steadily made Right-Wing extremism ever more respectable. We’re all paying the price for that now and will probably continue to do so for a long time to come.

Private Empire: ExxonMobil and American Power, by Steve Coll

Many acute observers of today’s world believe that multinational corporations exert more influence on the course of human affairs than do nation states. Steve Coll’s portrait of ExxonMobil, one of the world’s largest private companies, makes the point vividly.

The Profiteers: Bechtel and the Men Who Built the World, by Sally Denton

US involvement in the Middle East is often attributed to the efforts of the country’s largest oil companies. Sally Denton makes the case that Bechtel, the world’s largest construction company, played an equally pivotal role.

Citizen Coke: The Making of Coca-Cola Capitalism, by Bartow J. Elmore

Originally written as a doctoral thesis in history, this inquiry into the business practices of Coca-Cola paints a decidedly negative picture of the company that possesses “the most-recognized brand in human history.” In the author’s view, the company pioneered what has emerged as the most profitable approach to business in today’s world: a lean mass-marketing machine that outsources both production and distribution of virtually all its products. “Ultimately,” he writes, “Coke’s genius, its secret formula in many ways, was staying out of the business of making stuff.” That’s Coca-Cola Capitalism.

Neither Snow Nor Rain: A History of the United States Postal Service, by Devin Leonard

If Republicans in Congress have their way, the United States Postal Service will become a private company, forced to compete with UPS and Federal Express on an equal footing. Devin Leonard’s history of the postal service from colonial times to the present day makes clear that the distinction between public and private is not clear.

Becoming Steve Jobs: The Evolution of a Reckless Upstart Into a Visionary Leader, by Brent Schlender and Rick Tetzeli

David McCullough’s intimate biography of Apple‘s Steve Jobs grabbed the headlines, and it was beautifully done, as is all of McCullough’s work. But this later entry from two journalists who followed Jobs closely for many years gives a far more accurate and balanced picture of the man and his life. He was even more complex than we knew.

Steve Jobs, by Walter Isaacson

The history of Apple—for a time the world’s largest privately owned company—is fundamentally the story of Steve Jobs. Since he cofounded the company in 197X, Jobs has dominated its evolution whether in or out of the CEO’s job. His obsessive attention to design and detail gave the world several of the iconic products of the early 21st century.

The Everything Store: Jeff Bezos and the Age of Amazon, by Brad Stone

The business journalist Brad Stone explores the world of amazon.com and finds it sorely lacking in humanity. Founder Jeff Bezos, as Stone explains, exploits his employees and brutalizes his suppliers. The picture that emerges is of a thoroughly despicable man motivated by greed and guided by a libertarian view of the world. Ayn Rand would have loved this guy.

61ixs17llplInnovation

Annie Jacobsen’s The Pentagon’s Brain left the strongest impression of the five books listed in this category.

The Wright Brothers, by David McCullough

Few of us know any more about the Wright Brothers than the image lingering in our minds of that flimsy biplane lifting off the dunes at Kitty Hawk. Here, the prize-winning biographer David McCullough tells their remarkable story. What’s especially interesting are the years after Kitty Hawk, when the brothers became world famous.

Rooftop Revolution: How Solar Power Can Save Our Economy — and our Planet — from Dirty Energy, by Danny Kennedy

The move to solar energy is inevitable. Sooner or later, the economic advantages of solar will be so compelling that the relatively few people today who still believe the coal and oil industries’ propaganda will eventually be forced to decide to install photovoltaic panels on their rooftops and commercial buildings. That’s the message that emerges from reading between the lines of Rooftop Revolution, the paean to solar energy by Danny Kennedy, one of the avatars of the rising solar industry.

Googled: The End of the World As We Know It, by Ken Auletta

Read this book, and you’ll understand why Google’s stock price stays in the stratosphere, why media executives from newspapers to films to television are terrified by the company—and why the Chinese government feels it necessary to rein it in. You’ll also understand how virtually all the company’s profits come from online advertising despite the proliferation of other products the company has introduced over the years.

The Idea Factory: Bell Labs and the Great Age of American Innovation, by Jon Gertner

In The Idea Factory, journalist Jon Gertner examines one period and one place where the evidence of American know-how was most pronounced: the time from the end of World War II to the late 1970s in Murray Hill, New Jersey, where AT&T’s Bell Laboratories was headquartered. There, an extraordinary assemblage of brilliant scientists and engineers, guided by a succession of equally brilliant managers, invented or developed into practical form the fundamental advances in science and technology that have shaped the world we live in today

The Pentagon’s Brain: An Uncensored History of DARPA, America’s Top-Secret Military Research Agency, by Annie Jacobsen

DARPA—the Defense Advanced Projects Research Agency—was created by President Dwight D. Eisenhower over the strenuous objections of the Joint Chiefs of Staff and just about everyone else in the military establishment. “Its mission is to create revolutions in military science and to maintain technological dominance over the rest of the world.” No doubt there are many in the military and in conservative circles who are thrilled at how successful the agency has been in fulfilling its mission, their original unhappiness notwithstanding. The rest of us should be scared.

51x0-tmdgvlFinance

Of the six books included in this category, I found Bethany McLean and Joe Nocera’s All the Devils are Here to be the most significant.

Money: The Unauthorized Biography—From Coinage to Cryptocurrencies, by Felix Martin

A macroeconomist and bond investor with a Ph.D. in Economics from Oxford University asserts that misunderstanding of what money is and isn’t has had doleful consequences, including the Great Recession sparked in 2008. “Money is not really a thing at all but a social technology,” he writes. It’s simply a form of credit, an IOU. Coins and currency are simply representations of money; so are bonds, letters of credit, commercial paper, and other financial instruments that facilitate trade today. Before 1973, when Richard Nixon took the US off the gold standard, money was given value by precious metals, either silver or gold. This led to what the author sees as confusion, giving kings, bankers, and the practitioners of that dismal new social science, economics, reason to believe that money possessed some objective reality quite irrespective of the parties to any financial exchange.

Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, by David Dayen

Journalist David Dayen exposes the criminal conduct that ran rampant during the fallout from what is so delicately referred to as the “housing bubble.” With a focus a handful of activists, most of them based in the state of Florida, Dayen uncovers the truth about the role of law enforcement officials and the Wall Street banks in forcing an estimated six million people out of their homes. It’s a grim and deeply unsettling story.

Flash Boys: A Wall Street Revolt, by Michael Lewis

In Flash Boys, the bestselling business journalist Michael Lewis tells the tale of the arcane and long-secret phenomenon known as high-frequency trading (HFT). The book reads like a thriller, showcasing the author’s legendary writing talent. Like the best fiction, it’s centered on people, not abstract processes or institutions, and the prose sings.

All the Devils Are Here: The Hidden History of the Financial Crisis, by Bethany McLean and Joe Nocera

In 1999, Time Magazine called three men—Alan Greenspan, Larry Summers, and Robert Rubin—the Committee to Save the World. TIME, and no doubt the three men themselves, seemed to think they were the smartest people in the whole wide world. Together, they had put in place the economic policies of the Clinton Administration, many of which we know today as catastrophic. Now, nearly two decades later, they don’t look so smart anymore.

The Big Short: Inside the Doomsday Machine, by Michael Lewis

A handful of marginal players in the financial industry populate the pages of Michael Lewis’ masterful study of the decline and fall of Wall Street. Lewis’ story largely ignores their much better-known counterparts who played such leading roles in making the mess that has been troubling us all ever since. These little-known speculators and investors actually managed to make a bundle from the Great Recession. Lewis explains how.

The Devil’s Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers, by Vicky Ward

A Vanity Fair writer offers an intimate, inside look at the people of Lehman Brothers, the venerable Wall Street investment bank whose record-setting bankruptcy is widely credited with triggering the meltdown of 2008. Like the close-up portraits of the rich and famous that often appear in the pages of her magazine, this book is nothing more, and nothing less, than a character study of homo sapiens wallstreetianus. It’s brilliantly done.

41hg-ih60jlBusiness and society

Hell’s Cartel by Diarmiud Jeffreys is the most compelling of the eight books listed below.

Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism, by Kathryn S. Olmsted

Most observers of the emergence of what has come to be called “conservatism” in America locate its roots in the 1950s, 60s, and 70s. In Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism, historian Kathryn Olmsted argues that the origins of the movement lie instead in the blood-stained labor conflicts in California’s Central Valley and Imperial Valley in the years before World War II. Ostensibly, the growers were fighting Communism, which was far from always the case.

Tangled Vines: Greed, Murder, Obsession, and an Arsonist in the Vineyards of California, by Frances Dinkelspiel

In Tangled Vines, journalist Frances Dinkelspiel tells the colorful story of California’s wine industry, enriching our understanding of the state’s history — and she makes it read like a thriller. The focal point of Dinkelspiel’s tale is the tragic 2005 fire that destroyed as much as $250 million worth of wine stored at the cavernous Wines Central warehouse in Vallejo. A 300-pound, self-styled wine expert named Mark Anderson set the fire in an attempt to cover up his theft over many years of millions of dollars worth of wine entrusted to his care.

Freedom’s Forge: How American Business Produced Victory in World War II, by Arthur Herman

Freedom’s Forge focuses on the role that America’s business community, and especially Big Business, played in the monumental effort that resulted in the unconditional surrender of Germany and Japan just months apart in 1945.  Two extraordinary men — William S. Knudsen and Henry Kaiser — are the stars of this story, business impresarios who marshaled the stupendous numbers of men and women and the unprecedented mountains of raw materials that supplied the U.S. and its Allies with the weapons of war.

Hell’s Cartel: IG Farben and the Making of Hitler’s War Machine, by Diarmuid Jeffreys

Hell’s Cartel, Diarmuid Jeffreys’ compelling story of the role of Germany’s largest industrial concern in the rise of the Nazis and the conduct of World War II. IG Farben was more than the world’s fourth largest business—it was, in fact, a cartel, or association of separate huge firms for much of its existence—and, more than any other company, it personified German science and Germany’s rise while it dominated much of the German economy between the two World Wars. Jeffrey’s focuses on the war crimes trials that brought 24 of IG Farben’s directors to justice.

The Quest: Energy, Security, and the Remaking of the Modern World, by Daniel Yergin

In 1991 Yergin published The Prize: The Epic Quest for Oil, Money, and Power, which gained the #1 spot on the New York Times nonfiction best-seller list, won the Pulitzer Prize, and established his firm, Cambridge Energy Research Associates, as the country’s most sought-after voice on energy issues. Two decades later, The Quest broadens and updates the earlier book, relating the monumental changes in energy markets wrought by technological innovation, historic geopolitical shifts, and our changing views of energy and climate.

Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local—and Helped Save an American Town, by Beth Macy

If you want to understand globalization and its impact on the US economy and on millions of hard-working Americans, Factory Man is a brilliant introduction. The man under Macy’s microscope, John W. Bassett III, was the grandson of the founder of what had been the largest manufacturer of wooden furniture in America for many years. After decades of successful and profitable work opening and running dozens of furniture factories, JBIII (as he’s called familiarly) organized the coalition that successfully persuaded the US government to pursue trade sanctions against dumping by Chinese furniture makers.

Empire of Cotton: A Global History, by Sven Beckert

Here’s a new take on the history of capitalism, recasting the Industrial Revolution as a natural extension of the European mercantile expansion that preceded it. In Empire of Cotton, Harvard historian Sven Beckert asserts that the more familiar industrial capitalism that came of age in the nineteenth century was grounded in what he terms “war capitalism” — the relationships forged by the European conquest of the Global South by force — and, in particular, on slavery.

The First Tycoon: The Epic Life of Cornelius Vanderbilt, by T. J. Stiles

T. J. Stiles won both the Pulitzer Prize and the National Book Award for this outstanding biography of one of the seminal figures in American economic history. Cornelius Vanderbilt was the model for the generation of capitalists who came to be known as Robber Barons.

November 14, 2016

Cocaine, the CIA, and a Central American revolution

central american revolutionMissionary Stew, by Ross Thomas

@@@@@ (5 out of 5)

Start with a hapless French-American journalist imprisoned by the Emperor-President of a small African country. The Emperor is a cannibal, which is admittedly worrisome, but the journalist is rescued by Amnesty International and returned to the United States. He’s penniless but makes his way to Los Angeles. Through a freak connection, which as it happens is no coincidence at all, he meets a movie star who offers him on the spot a job as superintendent of an apartment building she owns in Santa Monica. And all this merely sets up one of two major strands of the plot.

A private war in Central America over tons of cocaine

Meanwhile, a political “money man” — a direct mail specialist — has flown to Denver to meet with a rich old man for advice about the upcoming 1984 presidential elections. The money man’s client, the Governor-elect of California (but not Ronald Reagan), has decided he’s ready to be President and has sent him around the country to discourage other potential candidates. But the rich old man tells him a story that sets him off on a wholly different path. A notorious former CIA agent turned heroin-smuggler has been killed in Singapore, apparently by agents of the CIA and the FBI. The story has something to do with a private war in Central America between the two agencies involving tons of cocaine and tens of millions of dollars.

Enter The National Investigator

Oh, and by the way, the journalist I mentioned? His estranged mother is the editor of a scandal sheet that is The National Inquirer in disguise. We’ll find out later that it’s secretly owned by an aging drug-runner in Florida.

And all this is just the beginning! Somehow, all these improbable characters are mixed up in a Central American crisis that bears uneasy similarities to the Iran-Contra Affair. (The book was published in 1983.)  Missionary Stew is another one of Ross Thomas’ gorgeously convoluted tales. Call it a thriller, or satire — whatever you call it, it’s fun from beginning to end.

A word about the author

In an introduction to the Kindle edition by the screenwriter and mystery novelist Roger L. Simon, some interesting speculation about Ross Thomas comes to the fore. As Simon writes, “I often speculated that Ross Thomas had been a spy, although it was hard to think of any government good enough for his deeply moral convictions. Still, his pre-crime writing career took him all over the world, including Africa and havens of the espionage game like Bonn. He worked for NGOs with odd-sounding names and did public relations for labor union officials in sore need of a sprucing up. Those are classical spook gigs, and I’ll never know for sure if he was one. I never had the nerve to ask . . .” (Thomas died in 1995.)

After reading quite a number of Thomas’ novels, I find Simon’s speculation right on-target. The man had an extraordinary grasp of the workings of politics here and abroad and of the espionage business. But, as Simon says, we’ll never know.

 

October 25, 2016

The President who launched the Mexican-American War

Mexican-American WarA review of A Country of Vast Designs: James K. Polk, the Mexican War, and the Conquest of the American Continent, by Robert W. Merry

@@@@@ (5 out of 5)

When we conjure up images of our greatest American Presidents, a handful of names invariably comes up: George Washington and Abraham Lincoln, of course; Thomas Jefferson and Franklin D. Roosevelt, too; perhaps Theodore Roosevelt as well.

Today many of us would add one or more from among those who have served in the White House since World War II. However, most historians would say it’s too early to understand the impact of their actions. Virtually anything any President does these days seems important and far-reaching at the time. History may well decide otherwise. The history books can’t be reliably written until all the secret archives have been opened.

A long black hole in our nation’s history

Professional historians aside, few of us are likely to identify any President who served between 1809, when Jefferson left office, until 1861, the year Lincoln moved into the White House. For the overwhelming majority of us, limited by the sketchy history classes of our youth, the middle of the nineteenth century was a black hole in our country’s Presidential history. (One possible exception is the controversial former general, Andrew Jackson, who served from 1829 to 1837. Many historians rank him among our greatest Presidents, and he often creeps into high school history textbooks, with or without a discussion of the blatant racism that drove him.)

A forgotten one-term President

It seems exceedingly unlikely that President James K. Polk would come to many minds as an example of the most important men who have served in the office. Yet a very strong case could be made that Polk’s single four-year term (1845-49) was, indeed, among the most consequential times in U.S. history — and that Polk himself was the prime mover. Robert W. Merry powerfully advances that argument in A Country of Vast Designs: James K. Polk, the Mexican War, and the Conquest of the American Continent.

Today, Americans take for granted that the United States is a continental power, its territory stretching uninterruptedly from the Atlantic to the Pacific. Of course, that was far from the case in the early years of the nation. Our territory was added piecemeal over nearly a century to the original 13 colonies. When President Jefferson took office in 1801, the U. S. consisted of just 16 states. American settlers had pushed only as far west as the Mississippi River. Then came the vast Louisiana Purchase when Jefferson bought it from Napoleon in 1803. In 1819, when James Monroe was in the White House, the U.S. purchased Florida from Spain. Apart from Alaska, bought from Russia in 1967 during the Administration of the deservedly long-forgotten Andrew Johnson, and the acquisition of Hawaii by conquest in 1898 under William McKinley, only a sliver of territory in our Southwest (the Gadsden Purchase) came into U.S. possession in the second half of the 19th Century. James K. Polk added all the rest, including nearly all the Southwest and all the Northwest of today’s United States. Just as Jefferson had doubled the continental expanse of the country, Polk added another third.

When America expanded to the Pacific

It would no doubt come as a surprise to most Americans that a nearly forgotten one-term President played such a central role in what was then (and later) called the country’s “Manifest Destiny.” Most of the new territory, though technically purchased by treaty, was in reality the result of a war with Mexico engineered by President Polk. Following the Mexican-American War (1846-48), much of Texas, all of California, and nearly all the land between them, came into the possession of the United States. During those same few years, Polk drove a hard bargain with Great Britain and acquired the Oregon Territory as well, establishing at long last a secure western border with Canada. That enormous chunk of land encompasses the present-day states of Oregon, Washington, Idaho, and parts of Wyoming and Montana.

American politics in the mid-nineteenth century

American politics in the mid-nineteenth century was dominated by three contending forces: the Democratic Party of Andrew Jackson and Martin Van Buren, divided between increasingly combative Southern and Northern wings; and the Whig Party, which evolved into the Republican Party in the 185os. Though other issues captured popular attention, the one that hung over the country like a shroud was slavery. With each passing year, slavery loomed ever larger in the balance of political forces not just in Washington, DC, but throughout the nation.

A political career in the shadow of giants

James K. Polk’s political career unfolded in the shadow of giants. During the time he served as Speaker of the House and Governor of Tennessee, five other men loomed much larger in the national consciousness. Three United States Senators, Henry Clay, Daniel Webster, and James E. Calhoun, dominated the politics of the time along with former Presidents Andrew Jackson and Martin Van Buren. Jackson, a Tennessean like Polk, was the younger man’s mentor and idol. Clay was Polk’s greatest rival. Far better known than the former Governor of Tennessee, former President Martin Van Buren was considered certain to win the Democratic  nomination for President in 1844. Instead, Polk — considered history’s first “dark horse” candidate for the White House — emerged the winner on the ninth ballot. He had intended to gain only the nomination for Vice President. Bitter sectional and personal rivalries among the leading candidates allowed Polk instead to emerge at the top of the ticket. As part of a bargain with his fellow Democrats, many of whom sought the office for themselves, Polk pledged not to run for reelection.

Four ambitious goals

As President, after winning a narrow victory over Henry Clay, the Whig Party’s candidate, Polk proved himself to be unimaginative, sometimes indecisive, a captive of the patronage politics of the times, and apparently humorless. However, Merry makes clear that Polk brought one supremely important attribute to the office: single-mindedness. At the outset, he set four ambitious goals as President, and he pursued them with nothing less than ferocity. Two involved finance (tariffs and banking), which raised great passion in business circles and on Wall Street. The other goals were to gain new territory for the U.S. in the Mexican Southwest and the bulk of the Northwestern territory disputed by Great Britain. (Polk fully expected he would have to go to war with Mexico, and he feared war with Britain as well.) Against all odds, Polk attained all four goals in the four short years of his Presidency.

When the U.S. and Mexico went to war

The dominant event of Polk’s Presidency was the Mexican-American War, which lasted for most of his time in office. Merry relates in detail how Polk maneuvered the country into war and prosecuted it successfully despite the incompetence and often insubordination of most of his senior generals. Again and again in the course of the conflict, Polk was also defied and undermined by his own Secretary of State — the future President James Buchanan — and breakaway diplomats. Given the disarray of the Mexican government and the poor state of its military, the United States might otherwise well have won the war in months, as Polk had hoped. Instead, it dragged on, costing thousands of lives and the equivalent of hundreds of millions, if not billions, of today’s dollars. More importantly, it left a dark stain on American history and proved to be a harbinger of aggressive US military operations for nearly two centuries to come.

October 18, 2016

Software success, philanthropy, and bipolar disorder

bipolar disorderA Truck Full of Money: One Man’s Quest to Recover from Great Success, by Tracy Kidder

@@@@@ (5 out of 5)

Most business biographies are about heroes. Though their stories may be leavened by references to the negative side of their character, the overall effect is overwhelmingly positive. Not so with Tracy Kidder’s even-handed new account of a successful software entrepreneur, A Truck Full of Money. Kidder doesn’t skimp on the man’s business successes. There were several. But he devotes nearly as much time to the many failures — and to his psychiatric problems. It’s a remarkable tale.

A software entrepreneur who isn’t a billionaire

Kidder’s subject is Paul English. Unlike the best-known people in his field, such as Bill Gates and Mark Zuckerberg, English has never made billions. Not even one billion. But by everyday standards — mine, and presumably yours, too — he became fabulously rich. At one point his fortune totaled about $120 million. That’s not even enough to buy and maintain a mid-sized LearJet. Poor guy, right? And unlike creative geniuses such as Steve Jobs, English didn’t make his money from brilliant inventions of his own. (You do know that Gates and Zuckerberg didn’t either, don’t you?)

A rare combination of talents

It turns out, in Kidder’s telling, that Paul English possessed that rare combination of extraordinary talent as a programmer and the ability to inspire and manage teams of equally brilliant people. His big success story was Kayak, a travel site unlike Expedia and Travelocity in that its purpose is not to sell users anything. A few years before 2004, when English cofounded Kayak, he had made a much smaller fortune when he sold an earlier company on the cusp of the dot-com crash.

A brutally honest account of bipolar disorder

If you’re involved in the high-tech business, you might find most rewarding the story of English’s progression from one job to another — until he finally got really lucky. For the general reader, though, Kidder’s no-holds-barred account of his subject’s experience with bipolar disorder stands out. There’s no sense summing up that story here. If the subject interests you, read this book. Kidder does a terrific job of conveying the pain English has suffered — and the problems his disorder caused for him in business. By the way, English insisted that Kidder tell the whole story with complete honesty.

One egregious error

Kidder committed one egregious error in A Truck Full of Money. In a passage about the history of the software industry, he writes: “In the 1960s, IBM created a complex operating system called DOS and all but gave it away — to Microsoft, then a small company.” There are several problems with this assertion. First, IBM did not create DOS. It was the product of a small software firm in Seattle that was one of Microsoft’s rivals. Second, DOS was written for personal computers, which weren’t developed until the 1970s. Third, Microsoft wasn’t around in the 1960s, either. The company was founded in 1975. Fourth, nobody gave DOS away. Bill Gates bought it for a pittance, and negotiated an extraordinarily one-sided royalty contract with IBM that became the cornerstone of his immense wealth. This is the sort of bonehead error I would never expect from Tracy Kidder. I’m genuinely surprised he didn’t hire a fact-checker.

For links to my reviews of other excellent biographies, go to 34 great biographies I’ve reviewed.

About the author

The list of published American nonfiction authors is staggeringly long, but only a handful of outstanding writers among them are actively working today. Tracy Kidder is unquestionably one of them. In 1982 he won both the Pulitzer Prize and the National Book Award for The Soul of a New Machine, an intimate look at the engineering of what was then one of the most ingenious and bestselling computers in the industry. A Truck Full of Money, his twelfth book, returns him to the high-tech industry after more than three decades of revolutionary changes.

October 11, 2016

A balanced new biography of Bobby Kennedy

bobby kennedyBobby Kennedy: The Making of a Liberal Icon, by Larry Tye

@@@@@ (5 out of 5)

During his years in the public eye in the 1950s and 60s, Bobby Kennedy was as controversial a figure as anyone else in American history. Millions despised him because he worked for Senator Joseph McCarthy. Millions more loathed him for his role in supporting the civil rights movement. Yet other Americans lionized him as the uncompromising liberal he was viewed as in the final years of his life. Little wonder that most biographers have veered either sharply left or sharply right in painting a portrait of this endlessly complex man. In Bobby Kennedy: The Making of a Liberal Icon, journalist Larry Tye steers a careful middle course. The result is a balanced and insightful biography of one of the most significant figures on the American stage in the mid-twentieth century.

The man known as RFK

Today, the man known as RFK is closely identified with his brother, President John F. Kennedy, who has cast a much longer shadow over American history. As Tye makes abundantly clear, the two were different in a great many ways: in age, stature, temperament, and political perspective. JFK was eight years older and three inches taller — Bobby was considered the runt of the large Kennedy litter — and the younger man bore grudges for decades. His older brother was far more pragmatic and much less prone to anger.

As an adult, managing Jack’s first race for the U.S. Senate in 1952, Bobby gained a reputation as “ruthless” that stayed with him for the remainder of his life. Tye insists that the label was misplaced. “Bobby was as intelligent as Jack, although less of an intellectual; Jack had Bobby’s toughness, although he was better at disguising it.” And Tye reveals Bobby to have been an inspiring boss at the Justice Department, a caring father and wife whom he loved passionately, and genuinely compassionate with the disadvantaged people he met along the campaign trail. Still, Bobby was notorious for the abiding hatred he possessed for a long list of enemies, including J. Edgar Hoover, Joe McCarthy’s pit bull Roy Cohn, Jimmy Hoffa, and Lyndon Johnson. However, much of his reputation for ruthlessness stemmed from his willingness to follow evidence of wrongdoing even among his friends. “During his three years as attorney general, his office prosecuted two congressmen, three state supreme court justices, five mayors, two chiefs of police, and three sheriffs — all Democrats.”

Bobby Kennedy’s evolution from Right to Left

Now, nearly half a century after Kennedy’s death, many of the passions have cooled, and long-secret archives have been opened. It’s now possible to view the man’s life in greater perspective. Biographer and journalist Larry Tye has accomplished just that, steering a steady course between the extremes in Bobby Kennedy: The Making of a Liberal Icon. As the title suggests, Tye’s theme is Kennedy’s evolution under fire as his brother’s campaign manager, anti-Communist zealot, no-holds-barred Senate investigator, Attorney General, U.S. Senator, and, finally, presidential candidate. Beginning public life identified with the Right, he came to its end less than two decades later as the bright new hope of the Left.

Bobby Kennedy is not easy to pigeonhole

Notwithstanding Kennedy’s popularity with the Left in 1968, it would be a mistake to pigeonhole him as a liberal. True, he was fiercely committed to ending poverty in America, and he had emerged as a champion of civil rights for African-Americans, albeit slowly and reluctantly. However, like his brother, RFK would have been horrified if asked to support the sort of policies advanced in 2016 by Senator Bernie Sanders. He was, if anything, pro-business, fiercely anti-Communist, a fervent supporter of the Cold War, and committed to economic policies that today might well be considered conservative.

Skip this if you know the history

In 1968, Robert F. Kennedy was poised for election to the White House when an assassin’s bullet cut him down at the age of 42. His victory was by no means assured, but he had just won the California primary and seemed on track to a showdown with Vice President Hubert Humphrey at the Democratic Convention. Given the intense popular hatred for the Vietnam War and Humphrey’s continuing support for Lyndon Johnson’s policies, it’s clear that the contest would have gone down to the wire, at the very least. Instead, as history shows, Humphrey emerged with the nomination bloodied by the tumultuous events that surrounded the 1968 convention. Had Kennedy won the nomination instead, or had Humphrey won in a fair fight, it seems highly likely that Richard Nixon would have gone down to defeat. Even heavily handicapped as he was, Humphrey came exceedingly close to winning.

For links to my reviews of other excellent biographies, go to 34 great biographies I’ve reviewed.

About the author

Boston journalist Larry Tye is the author of seven nonfiction books, three of which are biographies. His previous subjects were Edward L. Bernays, the father of public relations, and the legendary Negro Leagues pitcher Satchel Paige.

 

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