Shareholders should come last

Wow.  Sometimes for the most stinging critiques of capitalism, you need to look in a business magazine.  Such as Steve Denning’s article in Forbes on the catastrophe that is managing companies to maximize stockholder value.  (The article in turn is a review of Roger Martin’s Fixing the Game).

The culprit turns out to be Jensen & Meckling’s infamous 1976 paper which argued that CEOs should be incentivized to share the concerns of shareholders, which was to be done by giving them massive amounts of company stock.  The CEOs didn’t object, of course, since this meant obscene amounts of money. 

What this led to was an epidemic of short-term thinking, a shorter business cycle, corruption and business scandals, and an orientation toward gaming the system (e.g. looting the pension fund, or outsourcing, in order to meet quarterly targets).  And as a kicker, the system fails at its own intended purpose: stockholder value has grown slower than back when companies were managed to maximize real-world benefits for customers.  

These things can be fixed, though it will require legal changes.  E.g. MArtin favors repealigng the “safe harbor” provision and FASB 142, both of which require executives to make predictions about stock performance and penalize them for not making targets. 

In short, companies that focus on delighting the customer not only do better for those customers, and for their employees, but they make more money and thus keep the stockholders happier too.  The whole trend of overpaying the CEO isn’t merely a great injustice; it’s also bad business.

 

 

Advertisement

Since Yesterday

Since Yesterday is Frederick Lewis Allen’s sequel to Only Yesterday, and deals with the ’30s in the same way. 

It’s a better and a worse book, due to its subject matter.  The first book had a lightness of tone (even when dealing with scandals and gangsters) that had to be abandoned facing the enormity of the Depression.  A quarter to a third of the population out of work, the farms of the Great Plains blown away as dust, heads of corporations bewildered as to what to do next, fascism marching in Europe– it wasn’t a cheery time.  The events give the book greater depth than its predecessor; but then they refuse to provide a nice coda.  He concludes with Britain’s declaration of war; the problem is that his story is only half told. 

This is clearer on a chart.  Here’s US industrial production from the height of the stock boom (September 1929) to the end of the war (August 1945):

Allen ends at the red line.  No wonder things still looked bleak!  Though the overall trend was up, immediate memory was dominated by the 1937 recession, which had gobbled up 2/3 of the gain since the New Deal.  Production was barely at the 1929 level again; it was hard to imagine that in a few years it would double that number.  (And keep rising; the current value of the index is over 1200.)

As a history of the New Deal, I prefer Wiliam Leuchtenberg’s Franklin D. Roosevelt and the New Deal, which goes into more detail and with more historical perspective.  Still, it’s an amazing period and there’s always something new to learn about it.  I hadn’t realized, for instance, that on the day Roosevelt took office, the banking system had ceased to function.  To prevent bank runs, governors were declaring bank holidays, and that day the rot reached the biggest banks, in Illinois and New York.

On the other hand, perhaps the lack of hindsight isn’t a vice, as Allen can convey the full frustration felt at the time.  Allen thinks the economy had a structural problem: industrialization was reducing the need for workers on farms and in factories even as unemployment soared; at the same time, the concentration of industries into megacorporations made it hard to start up new enterprises.  (He points out that the banks were sitting on plenty of credit; there just didn’t seem to be much to lend to.  The megacorporations could fund their own research and expansion.)  There’s some truth to the idea of restructuring– e.g. the share of the population engaged in agriculture went from 21.5% to 16% from 1930-1945.  But the structure hypothesis doesn’t explain why the preceding and following periods were prosperous.  It looks much more like a demand crunch.  (Moral: don’t listen to businessmen about how to end a recession.  They have no idea, and their vague notions about “confidence” and “deficits” are plumb wrong.)

Again, one of the lessons of Allen’s books is how little has changed in America’s political structure.  Hoover was not as inactive as one might think– he had some small-scale stimulus going– but the business class had about the same program as today: prop up the banks, then just wait for things to get better, forever if necessary.  There was a good deal of horror over Roosevelt going off the gold standard, establishing relief programs, dividing commercial and investment banking, supporting unions, raising taxes on the rich, and above all regulating business.  On the other hand, when Roosevelt moved toward them in 1937– scaling back the New Deal and trying to balance the budget– he was rewarded with a resounding recession.  As Allen points out, of all the things Roosevelt tried, the only things that arguably worked were stimulus spending and devaluation. 

The most striking difference in our times is the near-absence of a radical left.  Roosevelt had to deal with substantial movements (Huey Long, the Townsendites, the unions, the socialists) who thought he was moving way too slowly and actually coddling business.  Not that this prevented his critics from calling him a dictator or a communist.  In general the middle and upper classes disliked him– but the country as a whole was all for the New Deal; he won re-election in the midst of of the Depression by a 61% landslide (with broad coattails: Congress was 3/4 Democratic). 

Also striking is the regional difference: the South was then a Democratic stronghold, and Republicans were strongest in the Northeast.  (It’s also worth noting that this was well before the Civil Rights era.  Though there were some victories for blacks, they’re all symbolic– e.g. Marian Anderson singing at FDR’s inauguration, Jesse Owens winning medals in Berlin.)

Everyone knows that the war ended the Depression; people often seem to think this was some kind of fluke with no contemporary application.  But economically, what the war did was make it politically acceptable to greatly multiply the size of government stimulus.  Roosevelt’s ’30s-era stimulus was too small, and had the same effect as Obama’s: improvement but no end to the economic doldrums. 

Allen once refers to Roosevelt as a “cripple”; I had thought his handicap wasn’t general knowledge.  But some Googling tells me I was wrong; it was well known that Roosevelt had polio and used a wheelchair, but the extent of it was downplayed.

Allen does his best to indicate the temper of the times, and makes a case that the ’30s in general were more sober (though not in the literal sense: we finally got rid of Prohibition) and that the mere rebelliousness and hedonism of the ’20s was largely gone– though there was no return to Puritanism.  (He quotes a survey that found that something like 70% of couples had sex before marriage.)  The intellectuals of the day did their best to focus attention on social problems– even as Hollywood pretended that there were none.  In wider histories of art, this makes the ’30s look like a strange blip: modernism was called off for a decade!

A sobering thought for bloggers: many of the cultural figures Allen names are still known… except for the opinion columns.  You can have a whole nation hanging on your analysis of politics, but no one will want to re-read them in fifty years.

Only Yesterday

My friend Linkless Bob recommended this book by Frederick Lewis Allen, and it’s a good read.    Somewhat cheekily, Allen decided to write a history of the ’20s in 1931.  (He also did one of the ’30s called Since Yesterday, which I’ve just started.)

Cal Coolidge

As such it’s very journalistic– it seems pretty clear that his primary research tool is the magazines and daily newspapers.  He rarely gets into very deep analysis, but on the plus side he’s lively and full of detail, and the method probably gives a good idea of what people were thinking and talking about. 

Bob noted, and I agree, that the story has an unexpected contemporary ring.  The laissez-faire libertarianism of the Republican Party turns out not to be an invention of Goldwater or Ayn Rand; it’s their default mode.  The belief in the benignity of business it there, and the feeling that government is there to serve business and for little else… except for repressing people when they complain.  Coolidge won national reknown, after all, for suppressing a police strike.  The late ’20s stock bubble was a lot like the housing bubble of the ’00s.  And the Republican response to the Crash was pretty much what the elites are agreed on now: do nothing, except perhaps make it worse with government austerity programs. 

(One partial exception: Republicans back then loved tariffs, which are now out of fashion– but that’s largely because we no longer fear foreign rival manufacturers.)

Allen does have a thesis: the postwar decade was dominated by a rebellion against prewar mores.  The country was tired of wartime sacrifice and had no intention of going back to Victorianism.  Women got the vote but mostly wanted to discard encumbrances, from unnecessary layers of clothing to hard domestic labor.   The literati were disgusted with everything except for sex and Freud.  The country was transformed by railroads, scientific management, the automobile, and radio.  (I find it fascinating that the dominant force in broadcasting, RCA, was known in financial contexts simply as “Radio”.)

It’s kind of curioius to read about the Florida land boom, in that all the locations mentioned as Future Metropoles are now, in fact, part of the metropolis of Miami.  As with many bubbles, the problem wasn’t that the development was unreasonable, but that it was premature.

From a later perspective, the ’20s can be seen as a preview– interrupted by the Depression– of prosperous midcentury America.  The mass media, the labor-saving devices, the exaltation of technology and manufacturing, the weak interest in progressivism, were all there. 

I think he’s pretty perceptive at finding what in contemporary life would be of permanent interest.  A few of the references aren’t explained… someone should put out an edition with hyperlinks.  I also wouldn’t trust him too far with cultural analysis.  I think he’s a bit simplistic on the hedonism and nihilism of ’20s intellectuals, for instance.  It was clear when he was writing what they were rejecting, not so clear perhaps what they were trying to build in its place.

(I also wouldn’t take his brief explanations of the Crash too seriously.  He may not be wrong, but in 1931 there was not really enough distance for real understanding.  Galbraith’s The Great Crash: 1929 is more informative on the economics.)

Why there’s no Batman

Not much of an observation, but I couldn’t fit it on Twitter.  After seeing Batman Begins I wondered why there are no superheroes.  After playing Arkham City I know: no respawns.  In real life you’d just die.

All it takes is one moment of inattention, and it’d be worse if (as in Mirror’s Edge) a fall actually killed you. 

(Corollary: maybe we’d get superheroes if we had backups, as in some SF futures, e.g. Stross’s Glasshouse.  Though there’d be the annoying inconvenience that after a backup, unlike a respawn, you wouldn’t know what killed you.)

Quick quiz

When was this written, and of what dance?

The music is sensuous, the embracing of partners– the female is only half dressed– is absolutely indecent; and the motions– they are such as may not be described, with any respect for propriety,  in a family newspaper.

(Answer: 1921; of the foxtrot.)

What the GOP did all year

I haven’t said much about politics lately, not because I’m not interested, but because Sullivan, Krugman, and Yglesias generally say all that needs to be said.  (I used to read Chait, but it’s no longer possible so far as I know to get his posts in blog format.  I hate feed format; I don’t want to open a new page to read each post.)

For an outsider, watching the Republican candidates has been hilarious and chilling.  They’ve been digging ever deeper in a dirty barrel to find a candidate who’s not Romney, and each is worse than the last.  Bachmann is crazy, Perry was a dud, Cain was out of his depth and turned out to be a skeevy liar, and now the Tea Party, crusaders against immorality and RINOs, are seriously considering Establishment figure and serial adulterer Newt Gingrich. 

My pet theory is that it’s all Sarah Palin’s fault.  If she’d run, she might well have united the Tea Party voters.  If she’d clearly said she wouldn’t run back in January, it might have been easier to either settle early on an alternative, or to entice a better candidate to run.  But who knows.  Palin looked important ansd scary when she seemed like the voice of craziness.  Now that they’re all competing for that crown, she stands out only for her ability to alienate even her own party.

Sullivan likes Ron Paul, which is mostly I think a measure of Paul’s amazing ability to make people find in him what they want to see.  Paul is crazy too, just not crazy in the same way as the rest of the base.  He’s a crank about the Fed, he’s a racist, he throws out his libertarianism when it conflicts with his fundamentalism (look up his views on abortion, evolution, and climate change), and above all his drive to dismantle the social safety net would send us back into a depression.   Against all this it’s small consolation that he probably wouldn’t get us into a war in Iran.

(I also think people don’t think out how a Paul presidency is supposed to work.  The president can’t legalize drugs by himself; he has to get two houses of Congress to agree.  It’s already a bit of a fantasy that he gets the GOP to swallow his apostasies and nominate him; how does he bring the rest of the GOP into his pro-legalization position?  And if he’s supposed to work with the Democrats instead– what’s in it for them?  Did you see any drug legalization passing in 2009?)

Who’s going to win?  It’s hard to say, because they all look like losers.   I think either Perry or Bachmann is the only logical Not Romney.  (Does anyone think Gingrich won’t self-immolate in the next 11 months?)  Bachmann can channel the rage of the base and is smarter than Palin; Perry can appeal to both fundies and the establishment.  (He doesn’t seem very smart, but the GOP likes dumb, stolid figures, and I predict he’ll start to be presented like Dubya was: a Guy Like You who’s all the better for not being an intellectual.)  Romney would be a lot like McCain: not to the base’s liking at all but someone who’s gonna get their vote over Obama.

(Huntsman is a parenthetical.  He’s the most appealing to an outsider, though he has had his moments of craven surrender to the hotheads.  But he seems to have no charisma and no ability to rise above his single-digit ceiling.)

How about the general, as the pundits like to call it?  I’m cautiously optimistic for Obama.  Obama is a man you should never underestimate; he plays a long game, he gets better when he’s fighting in a corner, and he’s more likeable than most of the GOP field.  And I think he’s learned that pressing for bipartisanship is not to his benefit any more. 

The economy is the big question mark.  For Obama to win it doesn’t have to be good in November 2012, just improving.  If it’s tanking again, he probably loses.

The Republicans are betting the farm on it being 2010 all over again.  And they may not be wrong.  They do negative very well; they can keep the economy down till the election; their base is a lot more excited than the Dems’.  And they can benefit from voters’ misplaced anger over the economy.  

On the other hand, it’s no slam dunk for them, for several reasons:

• The electorate skews much more Democratic in a presidential election. 
• The Ryan plan, the shutdown theater, and their eagerness to give more to the 1% haven’t played as well as they thought.
• Not-Romney is going to be scary; Romney is going to be not exciting enough.  

But Democrats shouldn’t get placid either.  The fractiousness of the Republicans is fun to watch, but it’ll disappear by the time they hold their convention.  And the craziness on the ticket (even if Romney is nominated he’ll need a crazy as VP) will not prevent a respectable showing– recall that Obama only got 52% of the vote running against Palin, and that was at a time when the Republicans were extremely malodorous in the public nostril.

(I just read Nate Silver’s rough analysis, and I think we end up in a similar place: neither side has a guaranteed victory; a worsening economy would probably kill Obama; Not-Romney would be bad but might not be fatal for the GOP.)

 

Le Naguen

Le Naguen, by Jean Hougron, is one of the strangest sf books I’ve ever read.  And obscurest— it doesn’t seem to be in print even on amazon.fr, and I don’t think it’s ever been translated.

La Roue (the Wheel), a union of 28 planets dominated by la Terre, has been fighting une guerre (a war) with les Vors (the Vors) for 32 years.  An officer named Dreik, the first to be captured by the Vors and the first to ever see a Vor, reappears in le système solaire with a proposal for a truce from his captors.

For the first 200 pages or so, the book seems to function as a heavy-handed satire of the Vietnam War.  (Hougron mostly wrote novels about Indochina.)  The Wheel is imperialist— it has an explicit ideology of Unavoidable Expansion— and democratic on the surface though its social system encourages conformity and conservativism.  Their enemies are virtually unknown, fighting a defensive war; Dreik describes his captors as benign and it’s emphasized how alien their culture is.  All this goes on and on, mostly through interminable interrogations of Dreik, punctuated by new outrages (they try to kill him!  they try him for treason!).

Then— for about a sixth of the book— it turns into space opera.  We finally get a clear description of the Vors, indeed a new set of Vor characters.  It turns out Dreik has been outfitted with a “naguen”, a sort of mental parasite which allows him to be partially controlled, and which allows the Vors to observe him from any distance.  This gets destroyed by his companion, a Slur, a sort of near-invulnerable trilobite with great powers of perception.

The Vors turn out to be divided.  One faction, the Permanents, believes in non-interference, but is also afflicted by sterility.  However, they’ve more or less taken over a more primitive alien race, the Cessaqs, who serve as their warriors and technicians.  The other faction, the Positifs, has learned how to use human woman as surrogate wombs to raise new Vors.  Yes, Vors need women!  It’s the Positifs who have prosecuted the war.

The Terrans believe that they have the enemy on the run, but their non-human allies are tired of the war, until the Vors attack a mostly-nonhuman planet.  They accelerate the war and fight star-by-star for a section of space called the Red Archipelago, which they win at the cost of losing nearly all their fleet.

(This section is made more confusing by Hougron’s quirky terminology.  He refers to galaxies, for instance, but apparently means nebulas.  He talks about unités Val rather than using any real astronomical measure, and refers to regions like “Space IV”.  He rather gives the impression that he thinks the stars are not much further than the planets, and talks about billions of sentients as if that was an impressive figure.)

And then the Vor ships surround Earth and the other planet of the Wheel, and the war is over— they’ve conquered totally.  The rest of the book concerns the assimilation of humans and the desperate attempts by small number of humans to resist.  The Vors use naguens to control most of the population, and take human women as brides.  We’ve suddenly gone from Vietnam to Nazi Europe.

Ultimately Dreik and a few hundred thousand others escape and establish a new colony far away— though, as it turns out, not far enough.  The Vors (now run by the most aggressive of the Positifs) are pursuing their expansion and run into the new colony.  But the humans have an ace— a local superintelligent xeno!  And then, incredibly, Hougron ends the book thus:

— […] We’ll see what happens.

Indeed, many things happened.  But that is another story.

Srsly.  He just ends the book, vaguely promising a sequel, which he never wrote.

The book is Exhibit A, I think, of what happens when you write without a plan.  At least, it’s hard to believe that Hougron sat down at his typewriter with this book in mind.  It rumbles from satire to space opera, from paranoid spy story to political intrigue to pseudo-history, covers about four different kinds of war, and then it just stops.  What’s most bothersome is that there’s nothing in the book you can trust. The Union is built up as a huge imperialist enterprise, and it just collapses and disappears.  The Vors are depicted as fighting defensively, only they end up taking over everything.  Dreik struggles to understand his predicament, seems to have a breakthrough, and it doesn’t matter.  The conflict between the Vors leads to a scene where one Vor predicts that the Positifs will crumble into animalism— only that doesn’t happen.  The younger Positifs depose their leader and seem to pursue a policy of enlightened helotry toward the humans— only it turns out they don’t need the humans after all.  The humans escape, only they didn’t really.

The same problem occurs in miniature with Dreik’s trilobite-like companion.  He’s one of the most interesting characters in the book, and more than once proves surprisingly capable.  Yet his personality is almost entirely passive, and all his interventions really accomplish is to keep Dreik alive a little longer.

How does Hougron do at world-building?  Well, the middle sixth of the book is the best part; the Vors are an interesting construction and he’s good at showing up conflicts within the two sides.  But many passages hint that he’s trying to show the Vors as highly alien beings whose mentality humans can’t fathom, and this entirely fails.  When he uses them as viewpoint characters, they just talk French like everyone else and their politics, though interesting, are perfectly comprehensible.  The Permanents are hands-off utopians; the Positifs are neo-primitive imperialists— nothing really strange or numinous there.

One cute though macabre detail: he refers to Apocalypse I and II in Earth’s history.  There’s a certain dark humor in the world ending twice.

How does he do as a writer?  Well, the first 200 pages are a slog; he insists on long conversations between Dreik and the human authorities which are as tedious for us as they are for the parties involved.  The prose stays dry and calm, almost never presenting a vivid image or turn of phrase.  There’s one bit of everyday novelistic detail— the hero’s mother is a magician, but not a very good one— that stands out precisely for its rarity.

I don’t mean to be entirely negative.  Overall the problem is that it seems like three different books mashed together: an antiwar satire, a space opera, and an apocalyptic horror story.  Though maybe it’s just cultural: these seem like three different things to an American, but I can see how they’d fit together for a 20C Frenchman.  France also experienced a pointless colonial slog and an apocalyptic defeat, just not in that order.

(If you’re wondering, I picked this book up in Montréal in the ’90s and never read it till now.)

 

 

 

 

 

 

 

 

Catwomen

Sparked by playing Arkham City, I grabbed a bunch of Catwoman TPBs from the library.  I have to say I am not overwhelmed, but by God can Adam Hughes draw Catwoman.  It looks to me like his depiction is the chief basis for the one in the game.

Down to the Wayne Tech invisibility barrier protecting her cleavage.

I read one book by Loeb/Sale and three by Pfeifer/Lopez/Lopez.  It’s probably something about my age, but superhero comics have to be phenomenally well done to escape the basic cheesiness of the concept.  Pfeifer tries for a certain realism, but he can’t dent the inherent fantasy.  He throws in something very real like Catwoman having a baby, and then the baby gets kidnaped by Soviet supervillains or Amazon warriors.  Loeb goes for more camp, but then he has things like mafiosi pledging allegiance to whoever has a certain ring, which sounds like a quest from Skyrim.  I never get the sense that the writers know a thing about crime, about thievery, about mafiosi, or even about psychopathy. 

 

Why does it work in the video games?  Partly because they’re interactive: stuff that would be cheesy in a comic or movie isn’t when you’re doing it.  And partly, they go for gothic excess rather than realism.  Or to be more precise, they use realism to heighten immersion, not to model everyday life.  It was probably wise that the game lets you see into Catwoman’s apartment but not go inside: making her an everyday figure who has to worry about diapers and nannies does not really improve her.  (The exception is Peter Parker, but that’s not an endlessly repeatable formula.)

 

Sounds like a good book!

This posting is all over the place, but this comment in it is fascinating:

So why invent police? What are they for? In “The Institutional Revolution,” the economic historian Douglas W. Allen theorizes that their purpose was to preserve manufactured goods from theft. Before the nineteenth century, Allen writes, theft was easy to detect. If your transport was a horse, you could recognize it. (For that matter, it could recognize you.) Not only was your coat hand sewn, but a tailor looking at its fabric could probably tell who had woven it. If any of these items were stolen, they were easy to reclaim if they could be found. With the advent of the industrial revolution, handmade goods gave way to standardized commodities, which all look alike, and it ceased to be possible to know an object’s provenance just by looking at it. The phrase “possession is nine-tenths of the law” came into vogue, and it was made illegal to hold stolen goods. After all, once goods became untraceable, they were all too easy to fence.

The point about premodern goods being easy to trace is really neat, a great reminder that the past is a foreign country.  The original book sounds quite interesting as well:

The Institutional Revolution traces the dramatic shift from premodern institutions based on patronage, purchase, and personal ties toward modern institutions based on standardization, merit, and wage labor—a shift which was crucial to the explosive economic growth of the Industrial Revolution.

All this kind of throws into doubt all the thieves’ guilds of D&D and other fantasies.  It’s not that crime didn’t exist; it’s just unlikely that it was organized in a modern, quasi-corporate fashion. 

 

I should really start making a list of things that appear in fantasy novels that actually never existed in the past…

Superhero simulation

Interesting review of Batman: Arkham City by Tom Bissell, who suggests that “of all the experiences video games make theoretically available to us, a simulated superhero experience turns out to be what, at the end of the day, video games do best”.  A little hyperbolic, but being Batman turns out to be pretty damn compelling.

One thing he says I disagree with, and it shows how much tastes differ: he doesn’t like the thug chatter, pointing in particular to a scene where Joker’s thugs discuss how they’d hypothetically break into Joker’s lair.  I thought that was pretty funny, myself.  It’s just the sort of stupid conversation extremely bored people would have.

At the end of AC Catwoman is looking a little peaked:

Even getting into an explosion doesn't motivate her to zip up a little

I really like playing Catwoman, and especially fighting as Catwoman– she is definitely faster than Batman, and there’s something to be said for a simpler array of gadgets.  She has a pretty good heist mission, as well as a revenge mission against Two-Face, but I wish they’d done more with her.  Intriguingly, playing Catwoman, the player can make the only moral choice in the game: whether to save Batman or not.  It’s not exactly a balanced choice, but I like the way they handled it.

I only realized on a replay that you can go look inside Catwoman’s apartment, though there’s a distorting screen that makes it hard to see.  She has some nice lamps, a couch, and a bare mattress.   Well, probably better than most of the other inmates.

Bissell notes that Batman is dickish with Robin (for sure), and says he’s dickish toward Catwoman, because when she says “I almost chipped a nail back there,” he responds “Funny.”  But that bit is actually well written.  They are setting up Catwoman as a girl who doesn’t like to be indebted (which leads into that moral choice later), and showing Batman as kind of humorless.  Which he is, along with the slight dickishness.  He’s an image of hypermasculinity, the strong silent type, and the game is honest enough to show that he is really not that good at empathy.  (When he rescues some cops from ice, he suggests they get warm, but it doesn’t seem to occur to him to go find them a coat.)