Category: Economics

Reagan’s “Dogged Support for Human Rights” Helped Advance Freedom and Peace

(p. C7) Reagan’s confidence that the Cold War could be won made him unusual. At the time, both Republicans and Democrats believed that America was in decline. Communism was on the march in Afghanistan, Africa, Central America and the Caribbean. Then, in 1980, President Jimmy Carter seemed hapless and ineffectual after he failed to rescue U.S. hostages in Iran. The CIA mistakenly believed that the Soviet economy was growing. The policies of arms control and détente —or direct negotiations—were ascendant.

William Inboden’s masterly diplomatic history “The Peacemaker: Ronald Reagan, the Cold War, and the World on the Brink” reveals the qualities that made Reagan an extraordinary president who established the conditions for the collapse of Soviet communism. . . .

At almost every juncture, Reagan rejected the advice of former president Richard Nixon, whose realist worldview privileged China over Japan, geopolitics over economics, equilibrium over victory, and stability over human rights. Reagan envisioned a future where high technology, a universal commitment to freedom and dignity, and a willingness to risk confrontation with the enemy resulted in a global democratic revolution and the eventual abolition of nuclear weapons.

. . .

Reagan’s horror of nuclear war led him to envision a world where nuclear weapons would be obsolete. Woven into Mr. Inboden’s story are the many times that Reagan saw the potential for nuclear catastrophe. In 1979 the commander of the North American Air Defense Command, or NORAD, told him that the U.S. had no defense against a Soviet missile strike. In 1981 he took a flight on a special Air Force One called the “Doomsday Plane” that had been made to withstand nuclear fallout. In 1982 he became the first president to participate in a continuity-of-government exercise, codenamed “Ivy League.” Reagan watched helplessly as a simulated nuclear exchange destroyed his beloved country.

The following spring Reagan proposed the development of technology that could intercept nuclear missiles before they hit their targets. Both his secretaries of defense and state were against his plans for a Strategic Defense Initiative. They were not alone. The many critics of Reagan’s antiballistic missile shield followed Sen. Edward M. Kennedy in calling it “Star Wars.”

Scientists said SDI wouldn’t work. Arms controllers said it would increase the chances of nuclear escalation. None of them understood that Reagan had redefined the arms race to America’s advantage. “It put the Soviets on the defensive,” writes Mr. Inboden, “fueling the Kremlin’s perennial fear of America’s technological prowess.”

. . .

Reagan’s opponents said that his dogged support for human rights and missile defense was both counterproductive and a distraction from good relations with the Soviets. Rather than conform to the accepted interpretation of reality, he sought to establish new facts on the ground that favored the expansion of freedom.

For the full review, see:

Matthew Continetti. “We Win and They Lose.” The Wall Street Journal (Saturday, Nov. 26, 2022): C7.

(Note: ellipses added.)

(Note: the online version of the review has the date November 25, 2022, and has the title “‘The Peacemaker’ Review: Ronald Reagan’s Cold War.”)

The book under review is:

Inboden, William. The Peacemaker: Ronald Reagan, the Cold War, and the World on the Brink. New York: Dutton, 2022.

Nazis Allowed Charitable Feeding of Enslaved Camp Inmates, to Increase Their Productivity

(p. A13) The remarkable story of Janina Mehlberg almost didn’t see the light of day. A Holocaust survivor and a mathematics professor in Chicago, Mehlberg stood out for making her way in an academic field dominated by men. But while teaching her students and giving conference papers, she was privately writing an account of her life’s most remarkable episode: her daring impersonation of a Polish aristocrat in World War II, a deception that allowed her to aid Poles who had been imprisoned by the Nazis.

. . .

The Majdanek camp held Polish prisoners forced into slave labor, Russian prisoners of war, and Jews who would be murdered either by being shot at close range or poisoned by gas.  . . .  As “the Countess,” Mehlberg served as the head of the Polish Main Welfare Council, visiting the camp regularly. The haughty, demanding countess negotiated ways to bring soup, bread, medicine—and hope—to a great many Polish prisoners. Betraying little emotion, this hidden Jew became a sort of patron saint by appearing again and again to witness their suffering and alleviate it as best she could. “Janina’s story is unique,” the authors assert. “She was a Jew who rescued non-Jews in the midst of the largest murder operation of the Holocaust.”

“The Counterfeit Countess,” too, is unsentimental. The writing is matter of fact; the authors include data about the numbers of meals served, the details of negotiations with Nazi officers, the changes in camp conditions as the war unfolded. Mehlberg recognized that the Germans were making trade-offs within their sick paradigm of racial superiority. Would it be more efficient to murder Poles or starve them while they worked? She persuaded Nazi higher-ups to let her organization provide thousands of tons of food to prisoners so that they could do the work that would feed the Nazi war machine. German commanders decided it served their interests to allow “the Countess” to continue providing food and medicine to enslaved workers.

For the full review see:

Michael S. Roth. “BOOKSHELF; Fake Title, Real Courage.” The Wall Street Journal (Thursday, Jan. 25, 2023): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date January 24, 2023, and has the title “BOOKSHELF; ‘The Counterfeit Countess’ Review: Fake Title, Real Courage.”)

The book under review is:

White, Elizabeth B., and Joanna Sliwa. The Counterfeit Countess: The Jewish Woman Who Rescued Thousands of Poles During the Holocaust. New York: Simon & Schuster, 2024.

Zuckerberg Praises Musk for Not Being Too Shy to Reduce Staff at X

(p. R3) At the beginning of the year, many were quick with predictions of X’s demise, in part because of the dramatic staff cuts made by Musk.

. . .

Perhaps the biggest impact of Musk’s staff reductions was provoking a broader conversation about staffing needs and overall productivity throughout Silicon Valley.

Even rival Mark Zuckerberg praised Musk for removing layers of management. “I also think that it was probably good for the industry that he made those changes because my sense is that there were a lot of other people who thought that those were good changes but who may have been a little shy about doing them,” the Facebook co-founder said.

For the full commentary, see:

Tim Higgins. “Elon Musk as Technoking? More Like DramaKing.” The Wall Street Journal (Monday, Dec. 18, 2023): R3.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date December 16, 2023, and has the title “In the Year of a DramaKing: Elon Musk.”)

The Social Security Administration Is Badly Administered

(p. B1) Few government agencies touch the lives of more Americans than the Social Security Administration — the agency pays $1.4 trillion in benefits to more than 71 million people every year.

But Social Security has been grappling with a customer service mess that threatens to grow worse before it gets better. The problems include long wait times on the agency’s toll-free phone line, a large backlog in disability applications and a growing problem with overpayments to low-income beneficiaries.

. . .

Training new workers typically takes more than a year because Social Security rules are so complex.

. . .

The waiting time on S.S.A.’s phone line, which is crucial for people with questions about benefits or those applying for benefits, averages 36 minutes. Average wait times have fluctuated over the past decade, but in 2013 the average wait time was 10 minutes. The agency recently began using a modernized toll-free phone system, but noted that more trained employees will be needed to reduce wait times.

There is a backlog of more than one million people waiting an average of seven months for initial decisions on disability benefit applications — a process that has been slowed by staffing issues at the agency and in state governments, which receive S.S.A. funding to determine applicants’ eligibility at the local level.

The agency also is under fire over overpayments of benefits that have led the agency to claw back billions of dollars, with some people receiving notices that they owe tens of thousands to the S.S.A.

. . .

Earlier this year [2023], the Social Security Administration placed last in a ranking of the best places to work in the federal government — . . . .

For the full commentary, see:

Mark Miller. “Social Security’s Customer Service Struggle.” The New York Times, SundayBusiness Section (Sunday, December 3, 2023): 7.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the commentary has the date Dec. 2, 2023, and has the title “When You Call Social Security, Expect to Wait Even Longer.” In a couple of places where the online version is slightly longer than the print version, the passages quoted above follow the online version.)

Lower-Middle-Class Chinese Risk the Darién Gap to Seek Opportunity and Freedom in the U.S.

(p. B1) Mr. Gao said he felt he had no choice but to leave China.

“I think we will only be safe by coming to the U.S.,” he said, adding that he believed that Xi Jinping, China’s leader, could lead the country to famine and (p. B4) possibly war. “It’s a rare opportunity to protect me and my family,” he said.

A growing number of Chinese have entered the United States this year through the Darién Gap, exceeded only by Venezuelans, Ecuadoreans and Haitians, according to Panamanian immigration authorities.

. . .

Their flight is a referendum on the rule of Mr. Xi, now in his third five-year term. Boasting that “the East is rising while the West is declining,” he said in 2021 that China’s governance model had proved superior to Western democratic systems and that the center of gravity of the world economy was shifting “from West to East.”

Every immigrant I interviewed this year who passed through the Darién Gap — a journey known as zouxian, or walking the line, in Chinese — came from a lower middle-class background. They said that they feared falling into poverty if the Chinese economy worsened, and that they could no longer see a future for themselves or their children in their home country.

In Mr. Xi’s China, anyone could become a target of the state. You could get in trouble for being a Christian, Muslim, Uyghur, Tibetan or Mongolian. Or a worker who petitions for back pay, a homeowner who protests the delayed completion of an unfinished apartment, a student who uses a virtual private network for access to Instagram or a Communist Party cadre who is found with a copy of a banned book.

. . .

Another migrant I spoke with who crossed the Darién Gap, Mr. Zhong, who wanted to use only his family name for fear of retribution, has a background similar to Mr. Gao’s.

. . .

The trouble for Mr. Zhong, now in his early 30s, started last December [2022] when police officers stopped his car for a routine alcohol test and saw a copy of a Bible on the passenger seat. They told Mr. Zhong that he believed in an evil religion and tossed the Bible on the ground and stomped on it. The officers then took his phone and installed an app on it that turned out to have software that would track his movements.

On Christmas Day, four police officers broke into a home where Mr. Zhong and three fellow Christians were holding a prayer service. They were taken to the police station, beaten and interrogated.

Like Mr. Gao, Mr. Zhong came across social media posts about the Darién Gap. He borrowed about $10,000 and left home on Feb. 22 [2023].

. . .

Mr. Zhong soon moved to a town of 30,000 people in Alabama. He had grown up near Chengdu, a city of 20 (p. B5) million. Now he felt truly alone. He works at a Chinese restaurant 11 hours a day, he said, and is unwilling to take a day off. He has learned to cook General Tso’s chicken and other Chinese American dishes. The pay is much better than in China, and he can send more money home. Every Sunday, he joins an online religious service, hosted by a church in Brooklyn’s Sunset Park, another community with a large population of Chinese immigrants.

He told me a joke over the phone: “Why did you go to the United States?” someone asks a Chinese immigrant. “Aren’t you satisfied with your pay, your benefits and your life?” The immigrant responds: “Yes, I’m satisfied. But in the U.S., I will be allowed to say that I’m not satisfied.”

“I can live like a real human being in the U.S.,” he said.

. . .

. . . Mr. Gao got his work permit, bought a car and started delivering packages for an e-commerce company. He makes $2 per package. The more he delivers, the more he makes.

. . .

On one Wednesday in November [2023], Mr. Gao said, he woke at 4 a.m., delivered more than 100 packages and didn’t get home until after 9 p.m.

He took the next day off. When the motorcade of Mr. Xi, who was in San Francisco for a meeting with President Biden, drove by, Mr. Gao joined other protesters on the sidewalk, chanting in Chinese, “Xi Jinping, step down!”

For the full commentary, see:

Li Yuan. “THE NEW NEW WORLD; Why More Chinese Are Risking Danger in Southern Border Crossings to U.S.” The New York Times (Monday, December 4, 2023): B1 & B4-B5.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the commentary has the date Dec. 3, 2023, and has the same title as the print version.)

Slow Regulatory Approval Is “A Pretty Big Barrier to Entry” for Smaller and Safer Innovative Nuclear Reactors

(p. B1) . . ., the great hope for the future of nuclear power is to go small.

Nearly a dozen companies are developing reactors that are a fraction of the size of those at Vogtle, betting that they will be quicker and cheaper to build. As the United States looks to transition away from fossil fuels that have underpinned its economy for 150 years, nuclear power is getting renewed interest, billions of dollars from the Biden administration and support from Republicans.

One reason is that nuclear plants can run at all hours, in any season. To those looking to replace coal and gas with wind and solar energy, nuclear power can provide a vital backstop when the air is calm or the sky is cloudy.

“The United States is now committed to trying to accelerate the deployment of nuclear energy,” John Kerry, President Biden’s climate envoy, said in September. “It’s what we believe we absolutely need in order to win this battle.”

. . .

(p. B4) One recent Pew survey found that 57 percent of Americans favor more nuclear plants, up from 43 percent in 2016. Republicans have traditionally backed atomic energy, but the survey found rising support among Democrats.

While many environmental groups still oppose nuclear power, some skeptics are softening.

. . .

For nearly five decades, the Nuclear Regulatory Commission has regulated large light-water reactors. Now it has to consider a dizzying array of new technologies and their safety characteristics.

The approval process can be slow. To date, the N.R.C. has certified only one small reactor design, developed by NuScale Power. NuScale’s light-water technology is similar to existing plants, but the company argued that smaller reactors required different safety rules, such as smaller evacuation zones in case of accidents. Securing approval took a decade and cost $500 million.

“It’s a pretty big barrier to entry,” said Jose Reyes, NuScale’s chief executive. “And this was for a technology that regulators are already familiar with.”

At a recent House hearing, Republicans and Democrats alike complained that a draft rule meant to help license advanced reactors was 1,173 pages long and largely unworkable.

“Everyone agrees that reactors need to be safe,” said Adam Stein, director of nuclear innovation at the Breakthrough Institute, a pronuclear research organization. “But it’s also possible for a regulator to be too conservative and too risk-averse.”

For the full story, see:

Brad Plumer and Ivan Penn. “Going Small to Confront a Big Problem.” The New York Times (Tuesday, Nov. 28, 2023): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 12 [sic], 2023, and has the title “U.S. Bets on Small Nuclear Reactors to Help Fix a Huge Climate Problem.”)

Refusenik Sharansky Argues That Palestinians Have Human Rights but Not the Right to Murder Jews

(p. A15) An Israeli politician and human-rights advocate, Mr. Sharansky was once the best-known refusenik—a name for Soviet Jews who were denied permission to emigrate to Israel. In February 1986, he became “the first political prisoner released by Mikhail Gorbachev.” He served as a cabinet minister in every Israeli government from 1996 to 2005, including a stint as Ariel Sharon’s deputy prime minister from 2001 to 2003.

Before emigrating to Israel, he spent nine years in Soviet prisons accused of treason. He’s 75 but jokes that he’s 66: “My nine years in prison don’t count.”

. . .

Mr. Sharansky abhors Oslo. Still regarded in some circles as the touchstone of Israeli-Palestinian compromise, the agreement handed control of Palestinian land to Yasser Arafat’s Palestinian Authority in the belief that he would be able to subdue Hamas. “I’m not against compromises with the Palestinians,” Mr. Sharansky says. “I’ve said I’m for a two-state solution from the moment I came to Israel. I want Palestinians to have the same rights as I, but they should never have an opportunity to destroy me.”

At Oslo, he says, Israel foisted “a ruthless dictator on the Palestinians. We told them, “Like it or not, he will be your leader.’ With [Bill] Clinton and all the free world, we gave Arafat the power to destroy all the beginnings of freedom of the Palestinian people and helped build a generation of haters.” Mr. Sharansky says it’s “absolutely ridiculous” that a “fifth generation” of Palestinians lives in refugee camps, but he says “their leaders are to blame. And the free world, that gives money to these leaders—a lot of money.”

Mr. Sharansky is certain that Israel’s security can be assured only by a free Palestinian society, in which people “enjoy a normal life, normal freedom, the opportunity to vote and have their own human rights.” In “The Case for Democracy” (2004), he wrote: “I remain convinced that a neighbor who tramples on the rights of its own people will eventually threaten the security of my people.” The book was published a year before Israel “disengaged” from the Gaza Strip, withdrawing the army and forcibly uprooting Jews who had settled there.

That decision led Mr. Sharansky to resign from Sharon’s cabinet. Arafat had failed to tame Hamas, and Mr. Sharansky believed Gaza would be taken over by the terrorist group, whose ideology is “suicide for the sake of destroying the state of Israel.” He resigned before disengagement took effect, because he didn’t want to “take responsibility for the fact that we, by our own hands, were creating the biggest terrorist base in the Middle East, and that missiles will come one day to Ashkelon,” a coastal city less than 10 miles from the Gaza border.

For the full interview, see:

Tunku Varadarajan, interviewer. “THE WEEKEND INTERVIEW; A Refusenik in a Country at War.” The Wall Street Journal (Saturday, Oct. 28, 2023): A15.

(Note: ellipsis added.)

(Note: the online version of the interview has the date October 27, 2023, and has the title “THE WEEKEND INTERVIEW; Opinion: A Refusenik in a Country at War.” In the original the word “refusenik” was italicized in the body of the interview.)

Natan Sharansky’s book mentioned above is:

Sharansky, Natan. The Case for Democracy: The Power of Freedom to Overcome Tyranny and Terror. New York: PublicAffairs, 2004.

California Regs Requiring Electric Trucks at Ports, Raise Supply Chain Costs, Fueling Inflation for Consumers

(p. B1) Neri Diaz thought he was ready for a crucial juncture in California’s ambitious plans, closely watched in other states and around the world, to phase out diesel-powered trucks.

His company, Harbor Pride Logistics, acquired 14 electric trucks this year to work alongside 32 diesel vehicles, in anticipation of a rule that says diesel rigs can no longer be added to the list of vehicles approved to move goods in and out of California’s ports. But in August the manufacturer of Mr. Diaz’s electric vehicles, Nikola, took back the trucks as part of a recall, saying it would return them in the first quarter of the new year.

“It’s a brand-new technology, first generation, so I knew things were going to happen, but I wasn’t expecting all my 14 trucks to be taken back,” he said. “It is a big impact on my operations.”

. . .

(p. B5) Large companies, with deep pockets and big facilities, are best positioned to make the green transition. Mike Gallagher, a California-based executive at Maersk, the Danish shipping giant, said the company had a fully electric fleet, comprising some 85 vehicles made by Volvo and BYD, the Chinese automaker, for transporting goods up to 50 miles out of the ports of Southern California. And it has worked with landlords to install scores of chargers at its depots.

“We’re well ahead of the curve,” he said.

But smaller trucking fleets do most of the port runs — accounting for some 70 percent at the Los Angeles port — and they are going to find the transition hard. The California Trucking Association has filed a federal lawsuit against the state’s trucking rules, including the one focused on port trucks, contending that they represent “a vast overreach that threatens the security and predictability of the nation’s goods movement industry.”

Matt Schrap, the chief executive of the Harbor Trucking Association, another trade group, said the port truck rules lacked exemptions that would help smaller businesses survive the transformation. Getting access to chargers is particularly difficult for smaller fleets, he said: They are expensive, and the truck yard landlords may be reluctant to install them, forcing the operators to rely on a public charging system that is only just getting built.

“The landlord is, like, ‘There’s not a snowball’s chance in Bakersfield that you’re going to tear up my parking lot to put in some heavy-duty charging,’” Mr. Schrap said.

Concern exists beyond the trade groups. Mr. Gallagher, the Maersk executive, said that if the clean truck rules caused serious problems for smaller operators, it could be “a significant disruption to the supply chain.”

. . .

Mr. Diaz, the operator whose Nikola trucks were recalled, said that charging the trucks cost roughly 40 percent less than diesel, and that he was impressed with their performance. Even with the help of state grants, he estimates that the electric trucks cost him as much as 50 percent more than diesel models. During the recall, Nikola has been covering the payments on the loans Mr. Diaz took out to buy the trucks, but he said he was concerned about the truck maker’s financial situation.

. . .

Rudy Diaz, president of Hight Logistics, said the new regulations had pushed up some of his costs as his company brought drivers onto its payroll and reduced its reliance on contract drivers using their own diesel trucks.

“It’s extra headaches, extra costs,” he said. “But consumers are asking for products that are more sustainable, and they’re willing to pay the price.”

For the full story, see:

Peter Eavis and Mark Abramson. “California Is Pushing E.V.s As the Future of Freight.” The New York Times (Saturday, December 30, 2023): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 29, 2023, and has the title “California Pushes Electric Trucks as the Future of Freight.”)

Planners of Megaprojects Almost Always Over-Promise and Under-Deliver

(p. B5) Bent Flyvbjerg is an expert in the planning and management of “megaprojects,” his name for huge efforts that require at least $1 billion of investment: bridges, tunnels, office towers, airports, telescopes and even the Olympics. He’s spent decades wrapping his mind around the many ways megaprojects go wrong and the few ways to get them right, and he summarizes what he’s learned from his research and real-world experience in a new book called “How Big Things Get Done.”

Spoiler alert! Big things get done very badly.

They cost too much. They take too long. They fall too short of expectations too often. This is what Dr. Flyvbjerg calls the Iron Law of Megaprojects: “over budget, over time, under benefits, over and over again.”

The Iron Law of Megaprojects might sound familiar to anyone who has survived a home renovation. But when Dr. Flyvbjerg dug into the numbers, the financial overruns and time delays were more common than he expected. And worse. Much worse.

His seminal work on big projects can be distilled into three pitiful numbers:

• 47.9% are delivered on budget.

• 8.5% are delivered on budget and on time.

• 0.5% are delivered on budget, on time and with the projected benefits.

. . .

Humans are optimistic by nature and underestimate how long it takes to complete future tasks. It doesn’t seem to matter how many times we fall prey to this cognitive bias known as the planning fallacy. We can always ignore our previous mishaps and delude ourselves into believing this time will be different. We’re also subject to the power dynamics and competitive forces that complicate reality, since megaprojects don’t take place in controlled environments, and they are plagued by politics as much as psychology. Take funding, for example. “How do you get funding?” he said. “By making it look good on paper. You underestimate the cost so it looks cheaper, and you underestimate the schedule so it looks like you can do it faster.”

For the full review, see:

Ben Cohen. “SCIENCE OF SUCCESS; 99% of Big Projects Fail. Lego Is the Fix.” The Wall Street Journal (Saturday, February 4, 2023): B5.

(Note: ellipsis added.)

(Note: the online version of the review has the date February 2, 2023, and has the title “SCIENCE OF SUCCESS; 99% of Big Projects Fail. His Fix Starts With Legos.”)

The book under review is:

Flyvbjerg, Bent, and Dan Gardner. How Big Things Get Done: The Surprising Factors That Determine the Fate of Every Project, from Home Renovations to Space Exploration and Everything in Between. New York: Currency, 2023.

As Freedom Left Hong Kong, So Did Hundreds of Billions of Dollars and 100,000 Citizens

(p. B1) This summer, when Hong Kong’s stock market rout seemed to have no end in sight, the city’s financial chief, Paul Chan, jumped into action, creating a task force to inject confidence into a market that was being pummeled by global investors wary of China.

Hong Kong cut taxes on trading, and Mr. Chan went on a roadshow to Europe and the United States, promising measures to “let investors feel optimistic about the outlook.” Investors were anything but sanguine, however, and the city’s stock exchange is among the world’s worst-performing stock markets this year.

. . .

Hundreds of billions of dollars flowed out this year as money managers and pension funds reduced their holdings in Hong Kong, which has long been a gateway for foreign investors wanting to put money into mainland China. The outflows were largely driven by an economic downturn in China and mounting pressure on American investors to sell their (p. B3) exposure to Chinese companies.

. . .

A former British colony, Hong Kong was handed back to China in 1997 with a pledge that it would maintain a high degree of self-governance under a policy called “one country, two systems.” For two decades, this allowed Hong Kong to define itself as unique and distinct from the rest of China, while offering financial access to the world’s second largest economy.

But after citywide protests in 2019, Beijing imposed the national security law, which has silenced political debate and stifled civic activity.

More than 100,000 residents have left Hong Kong over the last few years, in part because of the security law and tough pandemic restrictions. Many young Hong Kong professionals who are still there have expressed a desire to leave, making it a challenge to recruit the talent that has helped the city function as a financial center.

Once a major hub for Wall Street banks, Hong Kong had a drought of initial public offerings this year. Companies raised the lowest amount of money since 2001, resulting in layoffs at financial institutions citywide.

Many international companies have stopped hiring for new positions in Hong Kong. With less money coming into the exchange and fewer transactions, dozens of brokerages have also closed.

For the full story, see:

Alexandra Stevenson. “Hong Kong Stock Market Ends in Loss For 4th Year.” The New York Times (Saturday, December 30, 2023): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 29, 2023, and has the title “Hong Kong Stocks Plunge to Losses for 4th Straight Year.”)

Tom Watson, Jr. Managed IBM’s Rare and Successful Self-Disruption by “Transitioning the Firm to Electronic Computing”

(p. 9) Thomas J. Watson Jr. seemed, from a young age, to be destined for failure.

. . .

“He played with fire, shot animals in the nearby swamps and pilfered things from neighbors’ houses,” Ralph Watson McElvenny and Marc Wortman write in “The Greatest Capitalist Who Ever Lived,” a compelling new biography of Watson Jr.

. . .

This is far from the first book about IBM.

. . .

But this is probably the most theatrical book about IBM ever published. McElvenny, who happens to be Watson Jr.’s eldest grandson, is privy to “personal and corporate papers” and, as the endnotes mysteriously specify, many “family sources.”

. . .

“The Greatest Capitalist Who Ever Lived” is about the challenges of corporate and family succession, an essential topic given that IBM itself was the father figure to most of the computing and tech industry. Watson Sr., “the old man,” was a type familiar to our times: the tech titan who runs a large company as an extension of himself. (The IBM machine that beat the “Jeopardy!” champion Ken Jennings bears his name.) For four decades, IBM was Watson Sr.’s fief. The company “was run entirely out of one man’s breast pocket,” McElvenny and Wortman write. Watson Sr. “made all strategic decisions and most minor ones” and “delegated almost no authority.”

To his lasting credit, he did truly take care of his employees and their families in a manner that bred a strong loyalty. That said, Watson Sr. demanded conformity and could be erratic and cruel.

. . .

IBM faced a classic version of what the Harvard Business School professor Clayton Christensen has termed the “innovator’s dilemma” and what the Nobel Prize-winning economist Kenneth Arrow described as a monopoly’s disinclination to innovate. IBM was making plenty of profit on punched cards and accounting machines, its customers were happy, so why rock the boat?

Watson Jr.’s intense antipathy toward his father ended up saving IBM. Just before the United States entered World War II, Junior gained self-confidence the old-fashioned way: by joining the Army Air Corps and flying a B-24. When he eventually returned to IBM (pushed to do so by his commanding officer, Maj. Gen. Follett Bradley, who thought Watson would be wasted as an airline pilot), he became the internal champion of transitioning the firm to electronic computing. He was perhaps the only person who could oppose his father in a company built on yes men.

While the book’s title calls him “the greatest capitalist,” it might more accurately, if less ringingly, call him “the greatest manager,” for Watson Jr. was much better at delegating and using his employees’ talents.

For the full review, see:

Tim Wu. “Next-Gen.” The New York Times Book Review (Sunday, December 17, 2023): 9.

(Note: ellipses added.)

(Note: the online version of the review was updated Dec. 15, 2023, and has the title “The Father-Son Struggle That Helped Ensure IBM’s Success.”)

The book under review is:

McElvenny, Ralph Watson, and Marc Wortman. The Greatest Capitalist Who Ever Lived: Tom Watson Jr. and the Epic Story of How IBM Created the Digital Age. New York: PublicAffairs, 2023.