September 2013 – 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.

2013 Has “Largest One-Year Increase in Arctic Ice” Ever Recorded

(p. A8) Sea ice in the Arctic Ocean underwent a sharp recovery this year from the record-low levels of 2012, with 50 percent more ice surviving the summer melt season, scientists said Friday. It is the largest one-year increase in Arctic ice since satellite tracking began in 1978.

For the full story, see:
JUSTIN GILLIS. “Arctic Ice Makes Comeback From Record Low, but Long-Term Decline May Continue.” The New York Times (Sat., September 21, 2013): A8.
(Note: the online version of the story has the date September 20, 2013.)

“I Didn’t Open My Own Company to Have Someone Else Tell Me How to Run It”

“”They’re picking on my employees,” Edward Taylor, the president of Down East Seafood, said, referring to the commission.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) The day after Jonathan Sanchez was released from prison in 2010 after serving three years for a burglary, he walked into Down East Seafood in Hunts Point in the South Bronx and asked for a job, and a second chance. He got both.

But now Mr. Sanchez must document the past he has tried to leave behind, in an 11-page application for a photo identification card issued by a city agency that is responsible for ferreting out organized crime. He is one of hundreds of food workers who have come under scrutiny in recent years by the agency, the New York City Business Integrity Commission, not because of any known ties to mob bosses but simply because they work for a company in Hunts Point.
. . .
“This was my brand new start,” said Mr. Sanchez, 26, who makes $40,000 a year packing lobster orders.
Mr. Sanchez said he worried that his past crime will follow him from job to job and brand him as an ex-con. “I feel violated because I don’t think those things have to be asked,” he said. “I feel that it could stigmatize me.”
. . .
Edward Taylor, the president of Down East Seafood, said more than half of his 60 employees had told him they did not want to complete the application. A couple of them have even said they would instead quit.
Mr. Taylor, who had to answer similar questions himself to register the company, said he would not have moved to Hunts Point from Manhattan in 2005 if he had known about the commission. The company, which he started in 1990 with $500 borrowed from a friend, supplies more than 700 establishments, including Dean & DeLuca, the Harvard and Yale Clubs and the dining rooms at the United Nations.
“They’re picking on my employees,” he said. “I didn’t open my own company to have someone else tell me how to run it.”

For the full story, see:
WINNIE HU. “Food Workers Criticize a Commission’s Scrutiny.” The New York Times (Sat., September 21, 2013): A16.
(Note: ellipses added.)
(Note: the online version of the story has the date September 20, 2013, and has the title “Food Workers in Hunts Point Criticize a Commission’s Scrutiny.”)

Google’s Bathrooms Showed Montessori Discipline

(p. 124) You could even see the company’s work/ play paradox in its bathrooms. In some of Google’s loos, even the toilets were toys: high-tech Japanese units with heated seats, cleansing water jets, and a control panel that looked as though it could run a space shuttle. But on the side of the stall–and, for men, at an eye-level wall placement at the urinals–was the work side of Google, a sheet of paper with a small lesson in improved coding. A typical “Testing on the Toilet” instructional dealt with the intricacies of load testing or C + + microbenchmarking. Not a second was wasted in fulfilling Google’s lofty–and work-intensive–mission.
It’s almost as if Larry and Sergey were thinking of Maria Montessori’s claim “Discipline must come through liberty…. We do not consider an individual disciplined only when he has been rendered as artificially silent as a mute and as immovable as a paralytic. He is an individual annihilated, not disciplined. We call an individual disciplined when he is master of himself.” (p. 125) Just as it was crucial to Montessori that nothing a teacher does destroy a child’s creative innocence, Brin and Page felt that Google’s leaders should not annihilate an engineer’s impulse to change the world by coding up some kind of moon shot.
“We designed Google,” Urs Hölzle says, “to be the kind of place where the kind of people we wanted to work here would work for free.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: ellipsis in original.)

Some Entrepreneurs Are Motivated by Desire for Personal Wealth

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

I have read many biographies of innovative entrepreneurs. Like the author of the review of the book discussed in the passages quoted below, I believe that they have a variety of motives. But I am more optimistic than the book author that many of the entrepreneurs, those I call “project entrepreneurs,” are motivated mainly by a desire to ‘make a ding in the universe.’ Among these I would count Walt Disney and Steve Jobs.

(p. A11) Successful entrepreneurs, in my experience, are tenacious, hardheaded and creative. They persist with their ideas long after others might have given up, and they are good at persuading clients, partners and investors to take a chance. Like successful people in any field, they are driven by a powerful inner need, sometimes positive, like the hunger to do something entirely original, but often less appealing: a large chip on the shoulder, a desire for revenge, a distaste for authority and in many cases flat-out greed.
. . .
In “Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value,” Daniel Isenberg, a professor of entrepreneurship at Babson College and before that at Harvard Business School, offers many useful stories of entrepreneurship, culled from his teaching experience. But it isn’t until two-thirds of the way through that he torturously concedes that every entrepreneur needs a streak of Gordon Gekko.
“I have gradually come to the difficult conclusion that the burning desire for extraordinary value capture is almost a sine qua non for the supreme effort required to convert the value from imagined into tangible value,” he writes. “Personal gain is the simplest and most powerful motivation. If a person does not feel deeply that ‘This must pay off for me,’ there will rarely be extraordinary value creation.”

For the full review, see:
PHILIP DELVES BROUGHTON. “BOOKSHELF; Who Moved My Fortune? Some entrepreneurs want to do good. Many more are driven by a chip on the shoulder, a desire for revenge, a distaste for authority.” The Wall Street Journal (Sat., July 31, 2013): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 30, 2013.)

Office Design that Forces Interaction, Causes Exhaustion, Stress, High Errors and Low Productivity

(p. D1) The big push in office design is forcing co-workers to interact more. Cubicle walls are lower, office doors are no more and communal cafes and snack bars abound.
Like most grand social experiments, though, open-plan offices bring an unintended downside: pesky, productivity-sapping interruptions.
The most common disruptions come from co-workers, as tempting as it is to blame email or instant messaging. Face-to-face interruptions account for one-third more intrusions than email or phone calls, which employees feel freer to defer or ignore, according to a 2011 study in the journal Organization Studies.
Other research published earlier this year links frequent interruptions to higher rates of exhaustion, stress-induced ailments and a doubling of error rates.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY; The Biggest Distraction in the Office Is Sitting Next to You.” The Wall Street Journal (Weds., September 11, 2013): D1 & D3.
(Note: the online version of the story has the date September 10, 2013, and has the title “WORK & FAMILY; The Biggest Office Interruptions Are… …not what most people think. And even a 2-second disruption can lead to a doubling of errors.”)

Among the academic papers referred to in the article are:
Wajcman, Judy, and Emily Rose. “Constant Connectivity: Rethinking Interruptions at Work.” Organization Studies 32, no. 7 (July 2011): 941-61.
Altmann, Erik M., J. Gregory Trafton, and David Z. Hambrick. “Momentary Interruptions Can Derail the Train of Thought.” Journal of Experimental Psychology: General (Jan. 7, 2013): 1-12.

Nanny Feds Take Revenge on Zucker for Trying to “Save Our Balls”

Craig Zucker. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A11) Mr. Zucker is the former CEO of Maxfield & Oberton, the small company behind Buckyballs, an office toy that became an Internet sensation in 2009 and went on to sell millions of units before it was banned by the feds last year.

A self-described “serial entrepreneur,” Mr. Zucker looks the part with tussled black hair, a scraggly beard and hipster jeans. Yet his casual-Friday outfit does little to subdue his air of ambition and hustle.
Nowadays Mr. Zucker spends most of his waking hours fighting off a vindictive U.S. Consumer Product Safety Commission that has set out to punish him for having challenged its regulatory overreach. The outcome of the battle has ramifications far beyond a magnetic toy designed for bored office workers. It implicates bedrock American notions of consumer choice, personal responsibility and limited liability.
. . .
In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone’s catalog.
Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. “Then,” says Mr. Zucker, “we crashed.”
On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a “corrective-action plan” within two weeks or face an administrative suit related to Buckyballs’ alleged safety defects. Around the same time–and before Maxfield & Oberton had a chance to tell its side of the story–the commission sent letters to some of Maxfield & Oberton’s retail partners, including Brookstone, warning of the “severity of the risk of injury and death possibly posed by” Buckyballs and requesting them to “voluntarily stop selling” the product.
It was an underhanded move, as Maxfield & Oberton and its lawyers saw it. “Very, very quickly those 5,000 retailers became zero,” says Mr. Zucker. The preliminary letters, and others sent after the complaint, made it clear that selling Buckyballs was still considered lawful pending adjudication. “But if you’re a store like Brookstone or Urban Outfitters . . . you’re bullied into it. You don’t want problems.”
. . .
Maxfield & Oberton resolved to take to the public square.On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission’s nanny-state excesses. The campaign’s tagline? “Save Our Balls.”
Online ads pointed out how, under the commission’s reasoning, everything from coconuts (“tasty fruit or deadly sky ballistic?”) to stairways (“are they really worth the risk?”) to hot dogs (“delicious but deadly”) could be banned.
. . .
. . . in February [2013] the Buckyballs saga took a chilling turn: The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.
This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law.
. . .
Given the fact that Buckyballs have now long been off the market, the attempt to go after Mr. Zucker personally raises the question of retaliation for his public campaign against the commission. Mr. Zucker won’t speculate about the commission’s motives. “It’s very selective and very aggressive,” he says.

For the full interview, see:
SOHRAB AHMARI, interviewer. “THE WEEKEND INTERVIEW with Craig Zucker; What Happens When a Man Takes on the Feds; Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.” The Wall Street Journal (Sat., August 31, 2013): A11.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the interview has the date August 30, 2013, and has the title “THE WEEKEND INTERVIEW; Craig Zucker: What Happens When a Man Takes on the Feds. Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.”)

Montessori Taught Larry Page and Sergey Brin to Always Ask Questions

(p. 122) “Their attitude is just like, ‘We’re Montessori kids,'” said Mayer. “We’ve been trained and programmed to question authority.”
Thus it wasn’t surprising to see that attitude as the foundation of Google’s culture. “Why aren’t there dogs at work?” asked Marissa, parroting the never-ending Nerdish Inquisition conducted by her bosses. “Why aren’t there toys at work? Why aren’t snacks free? Why? Why? Why?”
“I think there’s some truth to that,” says Larry Page, who spent his preschool and first elementary school years at Okemos Montessori Radmoor School in Michigan. “I’m always asking questions, and Sergey and I both have this.”
Brin wound up in Montessori almost by chance. When he was six, recently emigrated from the Soviet Union, the Paint Branch Montessori (p. 123) School in Adelphi, Maryland, was the closest private school. “We wanted to place Sergey in a private school to ease up his adaptation to the new life, new language, new friends,” wrote his mother, Eugenia Brin, in 2009. “We did not know much about the Montessori method, but it turned out to be rather crucial for Sergey’s development. It provided a basis for independent thinking and a hands-on approach to life.”
“Montessori really teaches you to do things kind of on your own at your own pace and schedule,” says Brin. “It was a pretty fun, playful environment– as is this.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: italics in original.)

Growth of Labor Safety Net Made Great Recession Deeper and Longer

Source of book image: http://si.wsj.net/public/resources/images/OB-VE881_bkrvre_GV_20121101145828.jpg

(p. 309) [Mulligan’s empirical results suggest] that employment was dropping not only because of declining demand for the employees’ products, but also because employers were substituting capital and other factors for labor. This surprising finding suggests that although a decline in aggregate demand for goods and services was one of the reasons for the decline in labor, other causes were also at play in most sectors of the economy. This fact is consistent with an inward shift in the supply of labor to the marketplace during this period.

In chapter 3, Mulligan introduces the main culprit responsible for this supplycurve shift–the unintended consequences of increases in the social safety net that substantially increased the marginal tax rate on work. In his model, Mulligan operationalizes this force into changes in the replacement rate (the fraction of productivity that the average nonemployed person receives in the form of means-tested benefits) and the self-reliance rate (1 minus the replacement rate), which is the fraction of lost productivity not replaced by means-tested benefits.
His conjecture is that, in a reverse of government policies in the 1990s that made work pay for single mothers by transforming welfare as we knew it into a program that nudged single mothers off the Aid to Families with Dependent Children rolls and into the workforce, “temporary” government program expansions to mitigate the (p. 310) short-run consequences of unemployment and the bursting of the housing bubble made a prolonged paid period of nonwork an offer that many Americans found too tempting to refuse.
Mulligan identifies and incorporates the major expansions in eligibility and benefit amounts for Unemployment Insurance and food stamps into an eligibility index that shows that most of the 199 percent growth in these programs between 2007 and 2009 was due to these changes. He uses this growth rate in a weighted index of overall statutory safety-net generosity to determine the degree to which it has influenced overall employment. He does a similar analysis of the means-tested Home Affordable Modification Program (HAMP), which facilitated substantial lender-provided discounts on home mortgage expenses for unemployment insurance-eligible workers. He finds that these market distortions that increased the marginal tax on work grew substantially in 2008, peaked in 2009–at almost triple their 2007 level–and then modestly fell in 2010 to a level appreciably above the 2007 level.
. . .
But his empirical evidence shows that the implementation of these “recession cures” was primarily responsible for the Great Recession’s depth and duration.

For the full review, see:
Burkhauser, Richard V. “Review of: “The Redistributive Recession: How Labor Market Distortions Contracted the Economy” by Casey B. Mulligan.” The Independent Review 18, no. 2 (Fall 2013): 308-11.
(Note: ellipsis, and words in brackets, added.)

Book that is under review:
Mulligan, Casey B. The Redistribution Recession: How Labor Market Distortions Contracted the Economy. New York: Oxford University Press, USA, 2012.

Messy Offices Encourage Creativity

(p. 12) Forty-eight research subjects came individually to our laboratory, . . . assigned to messy or tidy rooms. . . . , we told subjects to imagine that a Ping-Pong ball factory needed to think of new uses for Ping-Pong balls, and to write down as many ideas as they could. We had independent judges rate the subjects’ answers for degree of creativity, which can be done reliably. . . .
When we analyzed the responses, we found that the subjects in both types of rooms came up with about the same number of ideas, which meant they put about the same effort into the task. Nonetheless, the messy room subjects were more creative, as we expected. Not only were their ideas 28 percent more creative on average, but when we analyzed the ideas that judges scored as “highly creative,” we found a remarkable boost from being in the messy room — these subjects came up with almost five times the number of highly creative responses as did their tidy-room counterparts.
. . .
Our findings have practical implications. There is, for instance, a minimalist design trend taking hold in contemporary office spaces: out of favor are private walled-in offices — and even private cubicles. Today’s office environments often involve desk sharing and have minimal “footprints” (smaller office space per worker), which means less room to make a mess.
At the same time, the working world is abuzz about cultivating innovation and creativity, endeavors that our findings suggest might be hampered by the minimalist movement. While cleaning up certainly has its benefits, clean spaces might be too conventional to let inspiration flow.

For the full commentary, see:
KATHLEEN D. VOHS. “GRAY MATTER; It’s Not ‘Mess.’ It’s Creativity.” The New York Times, SundayReview Section (Sun., September 15, 2013): 12.
(Note: ellipses added.)
(Note: the online version of the commentary has the date September 13, 2013.)

The main academic paper referred to in the commentary is:
Vohs, Kathleen D., Joseph P. Redden, and Ryan Rahinel. “Physical Order Produces Healthy Choices, Generosity, and Conventionality, Whereas Disorder Produces Creativity.” Psychological Science 24, no. 9 (Sept. 2013): 1860-67.