Capitalism – Page 14 – artdiamondblog.com

Among 1890s Wall Street Elite, “It Was Fashionable to Be Anti-Semitic”

Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) J.P. Morgan may well have been the most powerful banker who ever lived. Certainly he was the most powerful American banker. But the banking world that he and his firm dominated was a short-lived one, lasting only from the 1890s to the Depression of the 1930s. Susie J. Pak explores Morgan’s world, especially its social aspects, in “Gentlemen Bankers,” and the exploration is very interesting indeed.
. . .
In Wall Street at the time, there were two groups of private banking firms; those with Jewish partners and those with gentile ones. And while they did business together, often forming syndicates to handle large underwritings, they led separate social lives. They belonged to different clubs, stayed at different hotels and resorts. They didn’t attend the weddings of one another’s children. The reason, of course, was anti-Semitism. But as Ms. Pak notes, it had nothing to do with the ancient, religiously motivated anti-Semitism typical in Europe. This latter-day anti-Semitism was essentially social in character: To be blunt, it was fashionable to be anti-Semitic.
In earlier decades of the 19th century, affluent Jews had mingled socially with their gentile neighbors. They had been among the founding members of such old-line clubs as the Union Club (est. 1836) and the Union League Club (1863). Jesse Seligman, a partner in the well-regarded Jewish banking firm of J. & W. Seligman, was vice president of the Union League Club in 1893. But when he put his son up for membership that year, he was rejected. “Those who voted against him,” a biographer of the Seligman family wrote, “said they had nothing against him personally; they objected to his race.” His stunned father resigned from the club. He died the next year, aged 66; some said the incident contributed to his death.

For the full review, see:
JOHN STEELE GORDON. “BOOKSHELF; Book Review: ‘Gentlemen Bankers’ by Susie J. Pak; In the age of J.P. Morgan, the sons of Jewish bankers attended Ivy League colleges, but were excluded from the myriad social and athletic organizations.” The Wall Street Journal (Fri, August 30, 2013): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date August 29, 2013, and has the title “BOOKSHELF; Book Review: ‘Gentlemen Bankers’ by Susie J. Pak; In the age of J.P. Morgan, the sons of Jewish bankers attended Ivy League colleges, but were excluded from the myriad social and athletic organizations.”)

The book under review, is:
Pak, Susie J. Gentlemen Bankers: The World of J.P. Morgan, Harvard Studies in Business History. Cambridge, MA: Harvard University Press, 2013.

Philosopher Herbert Spencer Defended Capitalism in America

Source of book image: online version of the WSJ review quoted and cited below.

Spencer was sometimes a much better philosopher than the modern caricature portrays, a caricature exemplified by the review quoted below and, perhaps, by the book reviewed. I would like to look at this book sometime, because there may be some interesting history in it—though I am not optimistic about the book’s economic assumptions, or its account of Spencer’s philosophy.

(p. A11) Herbert Spencer, the 19th-century British philosopher, is remembered today as the forbidding — almost forbidden — father of “Social Darwinism,” a school of thought declaring that the fittest prosper in a free marketplace and the human race is gradually improved because only the strong survive. In Barry Werth’s satisfying “Banquet at Delmonico’s,” Spencer is also a querulous 62-year-old celibate whose 1882 American tour culminates in a feast to which are invited the “mostly Republican men of science, religion, business, and government” who shared and spread the Spencerian creed.

Applying Darwinian insights about evolution to political, economic and social life — though he did not himself use the term “Social Darwinism” — Spencer concluded that vigorous competition and unfettered capitalism conduced to the betterment of society. He predicted that the American, raised in liberty, would evolve into “a finer type of man than has hitherto existed,” dazzling the world with “the highest form of government” and “a civilization grander than any the world has known.”
. . .
The public clamor over the visit of a dyspeptic foreign philosopher to these shores was partly due to the indefatigable promotion of Edward Livingston Youmans, Spencer’s chief American proselytizer, who called his beau ideal the most original thinker in the history of mankind. Youmans is among the several critics and apostles of Spencer and Darwin whose profiles Mr. Werth skillfully interweaves in this Gilded Age tapestry.

For the full review, see:
BILL KAUFFMAN. “BOOKSHELF; Darwin in the New World; When the father of Social Darwinism came to America, the place where the fittest were supposed to thrive.” The Wall Street Journal (Fri., January 9, 2009): A11.
(Note: ellipsis added; italics in original.)

The book under review is:
Werth, Barry. Banquet at Delmonico’s: Great Minds, the Gilded Age, and the Triumph of Evolution in America. New York: Random House, 2009.

For a more balanced account of Spencer, see the first review below for the mostly good in Spencer, and the second review below for the mostly bad in Spencer:
Diamond, Arthur M., Jr. “Spencer’s Tragedy: Review of Herbert Spencer’s The Principles of Ethics.” Modern Age 24, no. 4 (Fall 1980): 419-421.
Diamond, Arthur M., Jr. “The State of Spencer: Review of Herbert Spencer’s The Man Versus the State.” Modern Age 28, nos. 2-3 (Spring/Summer 1984): 286-288.

iPhone: “A Gleaming World of Innovation and Opportunity, of Capitalism Behaving Well”

“The theft of electronic devices like iPhones has fueled a rise in subway crime this year, the police say. In the past, New Yorkers were mugged, sometimes killed, for bomber jackets, Cazal glasses and Air Jordan sneakers.” Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.

(p.24) The current spate of iPhone thefts feels, if anything, more poignant than disruptive. Apple products have always read as cooler than their rivals’ because their design suggests a gleaming world of innovation and opportunity, of capitalism behaving well — a world that seems ever diminishing, ever less accessible to the struggling and young.

Unlike the sneakers and glasses that caused such a fury in the ’80s and ’90s, iPhones didn’t originate in the celebrity system. They come with a democratic ethos (if not the analogous price tag); BlackBerrys are for suits, but even a child can work an iPhone. Wasn’t everyone supposed to have a shot?

For the full story, see:
GINIA BELLAFANTE. “BIG CITY; Easy to Use and Easy to Steal, a Status Object Inches Out of Reach.” The New York Times, First Section (Sun., October 30, 2011): 24.
(Note: the first paragraph quoted above is from the print version, rather than from the somewhat different online version. The second quoted paragraph is the same in both versions.)
(Note: the online version of the story has the date October 28, 2011, and has the slightly different title “BIG CITY; Easy to Use, or Steal, but Inching Out of Reach.”)

Cuban Government Employees “Are Known for Surly Service, Inefficiency, Absenteeism and Pilfering”

(p. A10) However small, . . . , the private sector is changing the work culture on an island where state employees earn meager salaries and are known for surly service, inefficiency, absenteeism and pilfering.
Sergio Alba Marín, who for years managed the restaurants of a state-owned hotel and now owns a popular fast-food restaurant, said he was very strict with his employees and would not employ workers trained by the state.
“They have too many vices — stealing, for one,” said Mr. Alba, who was marching with his 25 employees and two large banners emblazoned with the name of his restaurant, La Pachanga. “You can’t change that mentality.”
“Even if you could, I don’t have time,” he added. “I have a business to run.”

For the full story, see:
VICTORIA BURNETT. “HAVANA JOURNAL; Amid Fealty to Socialism, a Nod to Capitalism.” The New York Times (Thurs., May 2, 2013): A6 & A10.
(Note: ellipsis added.)
(Note: the online version of the story has the date May 1, 2013.)

After Failing to Enslave Indians, Starving Jamestown Colonists Ate 14-Year-Old Girl

“A facial reconstruction of a 14-year-old girl whose skull shows signs that her remains were used for food after her death and burial.” Source of caption and image: online version of the NYT article quoted and cited below.

Acemoglu and Robinson in the long, but thought-provoking, opening chapter of their Why Nations Fail book, discuss starvation at the Jamestown colony. Only they don’t mainly attribute it to a harsh winter or a slow rescue from England, as does the article quoted below (it is from the New York Times, after all).
Economists Acemoglu and Robinson (p. 23) instead criticize the colony’s initial plan to thrive by enslaving natives to bring them gold and food. Eventually John Smith made the bold suggestion that the colonists should try to work to produce something to eat or to trade. The rulers of the colony ignored Smith, resulting in starvation and cannibalism.

(p. A11) Archaeologists excavating a trash pit at the Jamestown colony site in Virginia have found the first physical evidence of cannibalism among the desperate population, corroborating written accounts left behind by witnesses. Cut marks on the skull and skeleton of a 14-year-old girl show that her flesh and brain were removed, presumably to be eaten by the starving colonists during the harsh winter of 1609.

The remains were excavated by archaeologists led by William Kelso of Preservation Virginia, a private nonprofit group, and analyzed by Douglas Owsley, a physical anthropologist at the National Museum of Natural History in Washington. The skull bears tentative cuts to the forehead, followed by four strikes to the back of the head, one of which split the skull open, according to an article in Smithsonian magazine, where the find was reported Wednesday.
It is unclear how the girl died, but she was almost certainly dead and buried before her remains were butchered. According to a letter written in 1625 by George Percy, president of Jamestown during the starvation period, the famine was so intense “thatt notheinge was Spared to mainteyne Lyfe and to doe those things which seame incredible, as to digge upp deade corpes outt of graves and to eate them.”

For the full story, see:
NICHOLAS WADE. “Girl’s Bones Bear Signs of Cannibalism by Starving Virginia Colonists.” The New York Times (Thurs., May 2, 2013): A11.
(Note: ellipsis added.)
(Note: the online version of the story has the date May 1, 2013.)

The Acemoglu book mentioned above is:
Acemoglu, Daron, and James Robinson. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business, 2012.

“Human remains from the Jamestown colony site in Virginia bearing evidence of cannibalism.” Source of caption and photo: online version of the NYT article quoted and cited above.

You Can Buy a New Flint Knife or Stone Ax

(p. 55) Let’s take the oldest technology of all: a flint knife or stone ax. Well, it turns out you can buy a brand-new flint knife, flaked by hand and carefully attached to an antler-horn handle by tightly wound leather straps. In every respect it is precisely the same technology as a flint knife made 30,000 years ago. It’s yours for fifty dollars, available from more than one website. In the highlands of New Guinea, tribesmen were making stone axes for their own use until the 1960s. They still make stone axes the same way for tourists now. And stone-ax aficionados study them. There is an unbroken chain of knowledge that has kept this Stone Age technology alive. Today, in the United States alone, there are 5,000 amateurs who knap fresh arrowhead points by hand. They meet on weekends, exchange tips in flint-knapping clubs, and sell their points to souvenir brokers. John Whittaker, a professional archaeologist and flint knapper himself, has studied these amateurs and estimates that they produce over one million brand-new spear and arrow points per year. These new points are indistinguishable, even to experts like Whittaker, from authentic ancient ones.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

Cultural Impact of Industrial Design Is Greater than Cultural Impact of Fine Arts

(p. C3) Capitalism has its weaknesses. But it is capitalism that ended the stranglehold of the hereditary aristocracies, raised the standard of living for most of the world and enabled the emancipation of women. The routine defamation of capitalism by armchair leftists in academe and the mainstream media has cut young artists and thinkers off from the authentic cultural energies of our time.
Over the past century, industrial design has steadily gained on the fine arts and has now surpassed them in cultural impact. In the age of travel and speed that began just before World War I, machines became smaller and sleeker. Streamlining, developed for race cars, trains, airplanes and ocean liners, was extended in the 1920s to appliances like vacuum cleaners and washing machines. The smooth white towers of electric refrigerators (replacing clunky iceboxes) embodied the elegant new minimalism.
“Form ever follows function,” said Louis Sullivan, the visionary Chicago architect who was a forefather of the Bauhaus. That maxim was a rubric for the boom in stylish interior décor, office machines and electronics following World War II: Olivetti typewriters, hi-fi amplifiers, portable transistor radios, space-age TVs, baby-blue Princess telephones. With the digital revolution came miniaturization. The Apple desktop computer bore no resemblance to the gigantic mainframes that once took up whole rooms. Hand-held cellphones became pocket-size.

For the full commentary, see:
Paglia, Camille. “How Capitalism Can Save Art; Camille Paglia on why a new generation has chosen iPhones and other glittering gadgets as its canvas.” The Wall Street Journal (Sat., October 6, 2012): C3.
(Note: the online version of the commentary has the date October 5, 2012.)

David Kay Johnston Defends Entrepreneurial Capitalism Against Crony Capitalism

Source of book image: http://media.npr.org/assets/bakertaylor/covers/manually-added/fineprint_custom-c26eb6a3f6c4d9bc09220769911f3cbeaa900b7f-s6-c10.jpg

I saw an informative C-SPAN interview with David Cay Johnston a while back. I had known from Johnston’s previous books and reporting, that he was devoted to exposing the outrages of crony capitalism. What the interview revealed to me was that Johnston was not opposed to capitalism in general, and in fact viewed himself as friendly to entrepreneurial capitalism.

I believe that big companies are not bad when they got and stay big by honestly earning big profits from willing and delighted consumers. But big companies are bad when, as often happens, they use their size to get the government to suppress start-up competitors or to take money from taxpayers to subsidize their activities.
I have not yet read Johnston’s latest book on the big and bad, but I expect it to present sad, but useful, examples.

Book discussed:
Johnston, David Cay. The Fine Print: How Big Companies Use “Plain English” to Rob You Blind. New York: Portfolio, 2012.

Entrepreneur Mackey Says Whole Foods Drops Prices as Larger Size Creates Economies of Scale

“John Mackey.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 16) In your new book, “Conscious Capitalism,” you write that Whole Foods sees its customers as its “most important stakeholders” and that the company is obsessed with their happiness. The biggest complaint I hear about Whole Foods is how expensive it is. Why not drop prices to make your customers happier?
People always complain about prices being too high. Whole Foods prices have dropped every year as we get to be larger and we have economies of scale. Also, people are not historically well informed about food prices. We’re only spending about 7 percent of our disposable personal income on food. Fifty years ago, it was nearly 16 percent.
. . .
In 2009, some Whole Foods customers organized boycotts after you wrote an op-ed in The Wall Street Journal expressing opposition to Obama’s health care proposals. Do you wish you hadn’t written it?
No, I don’t. I regret that a lot of people didn’t actually read it and it got taken out of context. President Obama asked for ideas about health care reform, and I put my ideas out there. Whole Foods has a good health care plan. It’s not a solution to America’s health care problems, but it’s part of the solution.
So did you vote for Romney?
I did.
I imagine a certain percentage of Whole Foods customers will also boycott because of this.
I don’t know what to say except that I’m a capitalist, first. There are many things I don’t like about Romney, but more things I don’t like about Obama. This is America, and people disagree on things.

For the full interview, see:
Andrew Goldman, Interviewer. “TALK; The Kale King.” The New York Times Magazine (Sun., January 20, 2013): 16.
(Note: ellipsis added; bold in original, indicating interviewer questions.)
(Note: the online version of the interview has the date January 18, 2013, and has the title “TALK; John Mackey, the Kale King.”)

Mackey’s book is:
Mackey, John, and Rajendra Sisodia. Conscious Capitalism: Liberating the Heroic Spirit of Business. Boston, MA: Harvard Business Review Press, 2013.

Is Economics Major Nuts to Have Left Investment Banking?

“Jeffrey Braverman, right, stepped away from Wall Street to join his father, uncle and cousin in the family’s New Jersey nut business.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B8) Ten years ago, Jeffrey Braverman was living the dream of many business school graduates. With a freshly minted bachelor’s degree in economics, he landed a job in 2002 at the Blackstone Group, a Wall Street firm specializing in private equity and investment banking.
Less than a year later, however, Mr. Braverman stepped away from Wall Street and returned to his family’s New Jersey nut business, the Newark Nut Company. It struck some as an odd choice: the family-owned company, which had been started by Mr. Braverman’s grandfather, Sol Braverman (known as Poppy), and had once employed 30 people, was down to two employees and two family members, Mr. Braverman’s father and his uncle.
Located in an indoor mall in a desolate part of Newark, the nut shop’s retail sales were fading and its wholesale business was, at best, stagnant. But Mr. Braverman harbored entrepreneurial ambitions.
At the beginning, he agreed to work with his father and uncle for a salary tied directly to how much new business he attracted. He focused on Internet sales and before long, they began to dwarf the existing business.
Now based in Cranford, N.J., the company has grown to more than 80 employees with more than $20 million in revenue, 95 percent of it online. The following is a condensed version of a recent conversation.
Q. Who leaves investment banking to work at a struggling family nut company?
A. Only someone nuts, right? My dad and my uncle both thought I was crazy. I was making more than they were at the time.
Q. Then why?
A. Have you ever read the book “Monkey Business”? It’s a fairly accurate profile of what it’s like to be in investment banking, at least at a junior level. You know, there’s this economic concept called deadweight loss, and I think a lot of investment banking is like that: it doesn’t really add anything to the world, to the economy. I just wanted to do more.
Q. I assume your father and uncle made you take a pay cut.
A. The one thing I did was, I didn’t want to take anything away from them. I structured it so that my compensation was 100 percent based on incremental profit improvement. So from their perspective, there wasn’t very much risk. I also got a small piece of the business. But at the time the business was worth nothing, book value. No one would have bought it.
Q. Did you have any experience in Internet sales?
A. In 1999, I was a freshman in college and I started our Web site, Nutsonline.com. I spent my second semester of freshman year working on that thing four or five hours a day. It kind of just trickled along. In 1999, very few people were buying from Amazon, so they certainly weren’t going to buy from Nutsonline. In 2000, I remember I set a goal: I wanted to do 10 orders a day.

For the full version of the condensed conversation, see:
IAN MOUNT. “Forsaking Investment Banking to Turn Around a Family Business.” The New York Times (Thurs., April 19, 2012): B8.
(Note: bold in original.)
(Note: the online version of the conversation has the date April 18, 2012.)

“Sol Braverman, Jeffrey’s grandfather, in the early 1930s.” Source of caption and photo: online version of the NYT article quoted and cited above.

Capitalism Would Bring Economic Growth to Bitouga, and Thereby Save the Elephants

“SEIZED AND DESTROYED; Gabon burned 10,000 pounds of ivory in June to show its commitment against poaching, but elephants are still being slaughtered.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A5) But as the price of ivory keeps going up, hitting levels too high for many people to resist, Gabon’s elephants are getting slaughtered by poachers from across the borders and within the rain forests, proof that just about nowhere in Africa are elephants safe.

In the past several years, 10,000 elephants in Gabon have been wiped out, some picked off by impoverished hunters creeping around the jungle with rusty shotguns and willing to be paid in sacks of salt, others mowed down en masse by criminal gangs that slice off the dead elephants’ faces with chain saws. Gabon’s jails are filling up with small-time poachers and ivory traffickers, destitute men and women like Therese Medza, a village hairdresser arrested a few months ago for selling 45 pounds of tusks.
“I had no idea it was illegal,” Ms. Medza said, almost convincingly, from the central jail here in Oyem, in the north. “I was told the tusks were found in the forest.”
She netted about $700, far more than she usually makes in a month, and the reason she did it was simple, she said. “I got seven kids.”
It seems that Gabon’s elephants are getting squeezed in a deadly vise between a seemingly insatiable lust for ivory in Asia, where some people pay as much as $1,000 a pound, and desperate hunters and traffickers in central Africa.
. . .
In June, Gabon’s president, Ali Bongo, defiantly lighted a pyramid of 10,000 pounds of ivory on fire to make the point that the ivory trade was reprehensible, a public display of resolve that Kenya has put on in years past. It took three days for all the ivory to burn, and even after the last tusks were reduced to glowing embers, policemen vigilantly guarded the ashes. Ivory powder is valued in Asia for its purported medicinal powers, and the officers were worried someone might try to sweep up the ashes and sell them.
Some African countries, like Zimbabwe and Tanzania, are sitting on million-dollar stockpiles of ivory (usually from law enforcement seizures or elephants that died naturally) that someday may be legal to sell.
. . .
(p. A10) The growing resentment of the government is undermining conservation efforts, too, with villagers grumbling about not seeing a trace of the oil money and saying Mr. Bongo should not lecture them about poaching for a living.
. . .
The children here eat thumb-size caterpillars, cooked in enormous vats, because there is little else to eat. Many men have bloodshot eyes and spend their mornings sitting on the ground, staring into space, reeking of sour, fermented home-brew.
. . .
International law enforcement officials say the illicit ivory trade is dominated by Mafia-like gangs that buy off local officials and organize huge, secretive shipments to move tusks from the farthest reaches of Africa to workshops in Beijing, Bangkok and Manila, where they are carved into bookmarks, earrings and figurines.
But often the first link in that chain is a threadbare hunter, someone like Mannick Emane, a young man in Bitouga. Adept in the forest, he was trained nearly from birth to follow tracks and stalk game, and was puffing idly on a cigarette he had just lighted with a burning log.
He conceded he would kill elephants, “for the right price.”
“Life is tough,” he said. “So if someone is going to give us an opportunity for big money, we’re going to take it.”
Big money, he said, was about $50.
His friend Vincent Biyogo, also a hunter, nodded in agreement.
“When I was born,” he said, “I dreamed of a better life, I dreamed of driving a car, going to school, living like a normal human being.”
“Not this,” he added quietly, staring at a pot of boiling caterpillars. “Not this.”

For the full story, see:
JEFFREY GETTLEMAN. “In Gabon, Lure of Ivory Is Hard for Many to Resist.” The New York Times (Thurs., December 27, 2012): A5 & A10.
(Note: ellipses added.)
(Note: the online version of the story has the date December 26, 2012.)

“A man in Bitouga, where people live in extreme poverty and say they resent the government’s telling them not to poach.” Source of caption and photo: online version of the NYT story quoted and cited above.