Tag Archives: money

Hedging With Death

Wiertz-burial

I’ve never met a hedge fund guy. I don’t think I ever will. They’re invariably male and white. Hedge fund guys move in very different circles than mere mortgage-bound morals like me, usually orbited by billions of dollars and extravagant toys like 200 ft yachts, Tuscan palazzos and a Lamborghini on every continent. At least that’s the popular stereotype.

I’m not sure I like the idea of hedge funds and hedge fund guys with their complex and obfuscated financial transactions, nano-second trading, risk shifting strategies, corporate raids and restructurings. I’m not against gazillionaires per se — but I much prefer the billionaires who invent and make things over those who simply bet and gamble and destroy.

So, it comes as no surprise to learn that one predatory hedge fund guy has found a way to make money from the death of strangers. His name is Donald F. “Jay” Lathen Jr. and his hedge fund is known as Eden Arc Capital Management. Lathen found a neat way for his hedge fund to profit from bonds and CDs (certificates of deposit) with survivor options. For each of his “death transactions” there would be two named survivors: himself or an associate and a terminally-ill patient at a nursing home or hospice. In exchange for naming Lathen as a financial beneficiary the patient would collect $10,000 from Lathen. Lathen would then rake in far greater sums from the redeemed bonds when the patient died.

Lathen’s trick was to enter into such deals only with patients that he calculated to be closest to death. Nothing illegal here, but certainly ethically head-scratching. Don’t you just love capitalism!

From Bloomberg:

A vital function of the financial system is to shift risk, but that is mostly a euphemism. Finance can’t make risks go away, or even really move them all that much. When the financial system shifts the risk of X happening from Y to Z, all that means is that Z gives Y money if X happens. If X was going to happen to Y, it’s still going to happen to Y. But now Y gets money.

Death is a central fact of human existence, the fundamental datum that gives meaning to life, but it is also a risk — you never know when it will happen! — and so the financial industry has figured out ways to shift it. Not in any supernatural sense, I mean, but in the regular financial-industry sense: by giving people money when death happens to them. One cannot know for certain how much of a consolation that is.

Another vital function of the financial system is to brutally punish the mispricing of risk through arbitrage. Actually I don’t really know how vital that one is, but people are pretty into it. If someone under- or overestimates a risk, someone else will find a way to make them pay for it. That’s how markets, even the market for death, stay efficient.

The normal way to shift the risk of death is life insurance — you die, the insurance company gives you money — but there are other, more esoteric versions, and they are more susceptible to arbitrage. One version involves “medium and long-term bonds and certificates of deposit (‘CDs’) that contain ‘survivor options’ or ‘death puts.'” Schematically, the idea is that a financial institution issues a bond that pays back $100 when it matures in 2040 or whatever. But if the buyer of the bond dies, he gets his $100 back immediately, instead of having to wait until 2040. He’s still dead, though.

But the bond can be owned jointly by two people, and when one of them dies, the other one gets the $100 back. If you and your friend buy a bond like that for $80, and then your friend dies, you make a quick $20.

But what are the odds of that? “Pretty low” was presumably the thinking of the companies issuing these bonds. But they didn’t reckon with Donald F. “Jay” Lathen Jr. and his hedge fund Eden Arc Capital Management:

Using contacts at nursing homes and hospices to identify patients that had a prognosis of less than six months left to live, and conducting due diligence into the patients’ medical condition, Lathen found Participants he could use to execute the Fund’s strategy. In return for agreeing to become a joint owner on an account with Lathen and/or another individual, the Participants were promised a fixed fee—typically, $10,000.

That is, needless to say, from the Securities and Exchange Commission administrative action against Lathen and Eden Arc. Lathen and a terminally ill patient would buy survivor-option bonds in a joint account, using Eden Arc’s money; the patient would die, Lathen would redeem the bonds, and Eden Arc would get the money. You are … somehow … not supposed to do this?

Read the entire story here.

Image: Antoine Wiertz’s painting of a man buried alive, 1854. Courtesy: Wiertz Museum, Netherlands / Wikipedia. Public Domain.

Send to Kindle

Litigation Financing

Have some loose change under your mattress? If so, and the loose change comes in the millions of dollars, you may want to consider investing it. But, not in a paltry savings account or the stock market. You should consider investing it in litigation. Yes, there are funds, run by money managers and lawyers, that do nothing but sue for financial gain. And, if that so-called “litigation fund” happens to be suing for a cause that you believe in, then you’ll reap a two-fold reward: you’ll collect a handsome investment return, and you’ll get the pleasure of ruining your legal adversary in the process.

Here’s just one example. Burford Capital, a British litigation investment company, has recorded an almost 400 percent growth in profits over the last five years. The firm reported recent profits of $77 million and declared a staggering 70 percent net return on its investments.

So, perhaps you should ditch the notion of becoming the next Warren Buffet; trash the thought of investing in companies that innovate, create and build, and pour your retirement funds in companies that sue and litigate. Furthermore, if you seek a really stellar return on your hard-earned cash, then you should consider investing in litigation funds that sue media companies over the first amendment — that’s where the action and the money is today, and that’s where the next part of this ethically questionable story leads.

From Wired:

The revelation that Silicon Valley billionaire Peter Thiel bankrolled Hulk Hogan’s sex tape lawsuit against Gawker sent shockwaves through the media industry. Commentators had barely recovered from the $140 million in damages awarded to Hogan. Now they were grappling with a bigger question: Is this kind of financial arrangement even legal? Could it happen to them?

The short answer to both is yes—picking up the tab on someone else’s lawsuit is now perfectly legal (it wasn’t always), and people who do it aren’t required to reveal that they’re doing it or why. The practice is reviled by the business community, and yet Thiel, a staunch pro-business libertarian, has shown billionaires everywhere that it’s possible to not only sue a media company indirectly for revenge but to make money doing it. Now that the message is out, there’s nothing to stop other billionaires from following his lead.

“This [case] could really change the landscape, because everyone who has gripes about what the media has done is going to start thinking about dollars and cents and running to their lawyers,” says Thomas Julin, a partner at Miami-based law firm Hunton and Williams who focuses on First Amendment litigation.

“And it’s going to get lawyers thinking, ‘Maybe I should be more willing to represent other individuals against the media.’”

Regardless of how you feel about Gawker, Hogan, or Thiel, this financial arrangement sets a dangerous precedent for anyone running a business—especially a media business. Litigation finance is a booming industry, and Thiel’s success likely makes the entire media industry vulnerable to professional litigation financiers willing to fund other vendettas.

“Litigation financing is really dangerous,” says Bryan Quigley from the Institute for Legal Reform, the civil justice arm of the US. Chamber of Commerce, an advocate for American businesses. “There’s no doubt it’s going to create more litigation in general.”

Read the entire story here.

 

 

Send to Kindle

One Dollar, One Vote

Top-20-political-donors

Money continues to swirl and flow in US politics. During a presidential election season the dollar figure is now in the billions. The number is unfathomable and despicable. And, yet according to the US Supreme Court money is free speech so it’s perfectly legal — although morally abhorrent (to many).

Thus, by corollary, many people feel (and know) that the system is twisted, rigged, and corrupt. Money sways lawmakers. Money helps write laws; it overturns others. Money elects. Money smears. Money impeaches. Money filters news; it distorts fact. Money buys influence, it buys access.

Of course, in a democracy, this would seem to be a travesty — many millions of ordinary citizens without thousands or millions of dollars are left without a voice. Because the voice of the many is completely usurped by the voice of the few, replete with their expensive megaphones and smartphones with speed-dial connections to their political puppets. But, don’t forget, we — the ordinary citizens of the US — don’t live in a democracy; we live in a plutocracy. The wealthy few, rule for and by themselves.

A small example, collectively, the top 20 political donors have so far, this election season alone, donated a staggering $171.5 million to their favorite political action committees (PAC). This doesn’t even include money that’s funneled directly to the candidates themselves.

It’s obscene and corrupt.

But, hey, it’s free speech, so we’re told.

From Washington Post:

Since 2015, super PACs have raised $607.7 million and have spent $452 million. The top 50 donors together have supplied $248.2 million—41 percent of the money raised to date.

The largest share of the money has come from donors who have given between $1 million and $5 million. Five contributors giving more than $10 million each contributed 14 percent of the total raised.

Many of the biggest super PAC donors have spread around their money, financing multiple super PACs that back presidential hopefuls and congressional candidates. They hail from various sectors, with many drawing on fortunes made in the energy industry, on Wall Street and in health care.

The Washington Post is also tracking donations made through “ghost corporations” whose backers cannot be identified. Clicking on “ghost corporations” below brings up a list the corporate contributors to super PACs who have not yet been publicly linked to individual donors.

Read the whole story here.

Image: Snapshot of top donors compiled by Washington Post.

Send to Kindle

Hyperlinks of Hypocrisy: Money, Power and Corruption

The extraordinary and very welcome leak of over 11 million files — collectively known as the Panama Papers — from one of the world’s largest offshore law firms, Mossack Fonseca, shows three very simple things. First, power corrupts. Second, the super-rich will continue to get richer. Third, the very rich live by different rules to the rest of the global population.

None of the preceding is, of course, of any surprise.

What fascinates me is to see this common thread of brash hypocrisy and self-aggrandizement links politicians of all stripes in democracies, with business leaders in totalitarian states, with so-called “communist” dictators, and holier-than-thou celebrities.

This tangled web of tax-avoiders and wealth-obfuscators links oligarchs with royals; it links Christians and Muslims; it links atheists with the pious; it links military dictators with socialists; it links criminals and bankers (too many, one and the same) and drug lords; it links sanctions-busters with sanctions-enforcers; it links the Saudis with the Iranians; it links footballers with cello players.

Avarice and greed knows no boundaries and transcends all political systems.

This, of course, shouldn’t come as any surprise either.

From the International Consortium of Investigative Journalists:

A massive leak of documents exposes the offshore holdings of 12 current and former world leaders and reveals how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies.

The leak also provides details of the hidden financial dealings of 128 more politicians and public officials around the world.

The cache of 11.5 million records shows how a global industry of law firms and big banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.

These are among the findings of a yearlong investigation by the International Consortium of Investigative Journalists, German newspaper Süddeutsche Zeitung and more than 100 other news organizations.

The files expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the president of Azerbaijan.

They also include at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.

One of those companies supplied fuel for the aircraft that the Syrian government used to bomb and kill thousands of its own citizens, U.S. authorities have charged.

“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley and author of “The Hidden Wealth of Nations: The Scourge of Tax Havens.” Zucman, who was briefed on the media partners’ investigation, said the release of the leaked documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy.

World leaders who have embraced anti-corruption platforms feature in the leaked documents. The files reveal offshore companies linked to the family of China’s top leader, Xi Jinping, who has vowed to fight “armies of corruption,” as well as Ukrainian President Petro Poroshenko, who has positioned himself as a reformer in a country shaken by corruption scandals. The files also contain new details of offshore dealings by the late father of British Prime Minister David Cameron, a leader in the push for tax-haven reform.

The leaked data covers nearly 40 years, from 1977 through the end of 2015. It allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.

Read the entire story here.

Video: The Panama Papers: Victims of Offshore. Courtesy: International Consortium of Investigative Journalists (ICIJ).

Send to Kindle

The American Dream: Socialism for the Rich Or Capitalism For All?

You know that something’s up when the Wall Street Journal begins running op-ed columns that question capitalism. Has even the WSJ now realized that American capitalism thrives by two sets of rules: one for the rich socialists, the crony capitalists who manipulate markets (and politics), invent loopholes, skirt regulation, and place enormous bets with others’ wealth; the other, for the poor capitalists, who innovate, work hard and create tangible value.

Now even Bill Gates — the world’s richest citizen — tells us that only socialism can address climate change! It’s clear that the continued appeal of Bernie Sanders to those on the political left, and the likes of Ben Carson and that-other-guy-with-the-strange-hair-and-big-mouth-and-even-bigger-ego to those on the right, highlights significant public distaste for our societal inequality and political morass. At times I feel as if I’ve been transported to a parallel universe, a la 1Q84, where the 99 percent will rise and finally realize meaningful change through social and economic justice. Can it really happen?

Nah! It’ll never happen. The tentacles that connect politicians and their donors are too intertwined; the pathways that connect the billionaires, oligarchs, plutocrats and corporations to lobbyists to regulators to lawmakers are too well-protected, too ingrained. Until these links are broken the rich will continue to get richer and the poor will continue to dream. So, for the time being remember: the rich are just too big to fail.

From the WSJ:

If you want to find people who still believe in “the American dream”—the magnetic idea that anyone can build a better life for themselves and their families, regardless of circumstance—you might be best advised to travel to Mumbai. Half of the Indians in a recent poll agreed that “the next generation will probably be richer, safer and healthier than the last.”

The Indians are the most sanguine of the more than 1,000 adults in each of seven nations surveyed in early September by the market-research firm YouGov for the London-based Legatum Institute (with which I am affiliated). The percentage of optimists drops to 42 in Thailand, 39 in Indonesia, 29 in Brazil, 19 in the U.K. and 15 in Germany. But it isn’t old-world Britain or Germany that is gloomiest about the future. It is new-world America, where only 14% of those surveyed think that life will be better for their children, and 52% disagree.

The trajectory of the world doesn’t justify this pessimism. People are living longer on every continent. They’re doing less arduous, backbreaking work. Natural disasters are killing fewer people. Fewer crops are failing. Some 100,000 people are being lifted out of poverty every day, according to World Bank data.

Life is also getting better in the U.S., on multiple measures, but the survey found that 55% of Americans think the “rich get richer” and the “poor get poorer” under capitalism. Sixty-five percent agree that most big businesses have “dodged taxes, damaged the environment or bought special favors from politicians,” and 58% want restrictions on the import of manufactured goods.

Friends of capitalism cannot be complacent, however. The findings of the survey underline the extent to which people think that wealth creation is a dirty business. When big majorities in so many major nations think that big corporations behave unethically and even illegally, it is a system that is always vulnerable to attack from populist politicians.

John Mackey, the CEO of Whole Foods, has long worried about the sustainability of the free enterprise system if large numbers of voters come to think of businesses as “basically a bunch of psychopaths running around trying to line their own pockets.” If the public doesn’t think business is fundamentally good, he has argued, then business is inviting destructive regulation. If, by contrast, business shows responsibility to all its stakeholders—customers, employees, investors, suppliers and the wider community—“the impulse to regulate and control would be lessened.”

Read the entire column here.

Send to Kindle

Monarchy: Bad. Corporations and Oligarchs: Good

Google-search-GOP-candidates

The Founders of the United States had an inkling that federated democracy could not belong to all the people — hence they inserted the Electoral College. Yet they tried hard to design a system that improved upon the unjust, corruptness of hereditary power. But while they understood the dangers of autocratic British monarchy, they utterly failed to understand the role of corporations and vast sums of money in delivering much the same experience a couple of centuries later.

Ironically enough, all of Europe’s monarchies have given way to parliamentary democracies which are less likely to be ruled or controlled through financial puppeteering. In the United States, on the other hand, the once shining beacon of democracy is firmly in the grip of corporations, political action committees (PAC) and a handful of oligarchs awash in money, and lots of it. They control the discourse. They filter the news. They vet and anoint candidates; and destroy their foes. They shape and make policy. They lobby and “pay” lawmakers. They buy and aggregate votes. They now define and run the system.

But, of course, our corporations and billionaires are not hereditary aristocrats — they’re ordinary people with our interests at heart — according to the U.S. Supreme Court. So, all must be perfect and good, especially for those who subscribe to the constructionist view of the US Constitution.

From the Guardian:

To watch American politics today is to watch money speaking. The 2016 US elections will almost certainly be the most expensive in recent history, with total campaign expenditure exceeding the estimated $7bn (£4.6bn) splurged on the 2012 presidential and congressional contests. Donald Trump is at once the personification of this and the exception that proves the rule because – as he keeps trumpeting – at least it’s his own money. Everyone else depends on other people’s, most of it now channelled through outside groups such as “Super PACs” – political action committees – which are allowed to raise unlimited amounts from individuals and corporations.

The sums involved dwarf those in any other mature democracy. Already, during the first half of 2015, $400m has been raised, although the elections are not till next autumn. Spending on television advertising is currently projected to reach $4.4bn over the whole campaign. For comparison, all candidates and parties in Britain’s 2010 election spent less than £46m. In Canada’s recent general election the law allowed parties to lay out a maximum of about C$25m (£12.5m) for the first 37 days of an election campaign, plus an extra C$685,185 (to be precise) for each subsequent day.

Rejecting a challenge to such campaign finance regulation back in 2004, the Canadian supreme court argued that “individuals should have an equal opportunity to participate in the electoral process”, and that “wealth is the main obstacle to equal participation”. “Where those having access to the most resources monopolise the election discourse,” it explained, “their opponents will be deprived of a reasonable opportunity to speak and be heard.”

The US supreme court has taken a very different view. In its 2010 Citizens United judgment it said, in effect, that money has a right to speak. Specifically, it affirmed that a “prohibition on corporate independent expenditures is … a ban on speech”. As the legal scholar Robert Post writes, in a persuasive demolition of the court’s reasoning, “this passage flatly equates the first amendment rights of ordinary commercial corporations with those of natural persons”. (Or, as the former presidential candidate Mitt Romney put it in response to a heckler: “Corporations are people, my friend,”)

In a book entitled Citizens Divided, Post demonstrates how the Citizens United judgment misunderstands the spirit and deeper purpose of the first amendment: for people to be best equipped to govern themselves they need not just the freedom of political speech, but also the “representative integrity” of the electoral process.

Of course, an outsize role for money in US politics is nothing new. Henry George, one of the most popular political economists of his day, wrote in 1883 that “popular government must be a sham and a fraud” so long as “elections are to be gained by the use of money, and cannot be gained without it”. Whether today’s elections are so easily to be gained by the use of money is doubtful, when so much of it is sloshing about behind so many candidates, but does anyone doubt the “cannot be gained without it”?

Money may have been shaping US politics for some time, but what is new is the scale and unconstrained character of the spending, since the 2010 Citizens United decision and the Super PACs that it (and a subsequent case in a lower court) enabled. Figures from the Center for Responsive Politics show outside spending in presidential campaign years rising significantly in 2004 and 2008 but then nearly trebling in 2012 – and, current trends suggest, we ain’t seen nothing yet.

The American political historian Doris Kearns Godwin argues that the proliferation of Republican presidential candidates, so many that they won’t even fit on the stage for one television debate, is at least partly a result of the ease with which wealthy individuals and businesses can take a punt on their own man – or Carly Fiorina. A New York Times analysis found that around 130 families and their businesses accounted for more than half the money raised by Republican candidates and their Super PACs up to the middle of this year. (Things aren’t much better on the Democrat side.) And Godwin urges her fellow citizens to “fight for an amendment to undo Citizens United”.

The Harvard law professor and internet guru Larry Lessig has gone a step further, himself standing for president on the single issue of cleaning up US politics, with a draft citizen equality act covering voter registration, gerrymandering, changing the voting system and reforming campaign finance. That modest goal achieved, he will resign and hand over the reins to his vice-president. Earlier this year he said he would proceed if he managed to crowdfund more than $1m, which he has done. Not peanuts for you or me, but Jeb Bush’s Super PAC, Right to Rise, is planning to spend $37m on television ads before the end of February next year. So one of the problems of the campaign for campaign finance reform is … how to finance its campaign.

Read the entire story here.

Image courtesy of Google Search.

Send to Kindle

Crony Capitalism Rules

The self-righteous preachers of on all sides of the political aisle in the U.S are constantly decrying corruption across the globe; one day the target may be a central African nation, the next it’s China, then a country in Latin America. Of course, this wouldn’t be so ****ing hypocritical if those in positions of power opened their eyes — and closed their wallets — to the rampant cash-fueled cronyism in their own backyards.

The threat to this democracy from those with hoards of money is greater than any real or imagined hostility from terrorism. Money greases and fuels the well-oiled machine in Washington D.C; it catalyses those who peddle influence; it brokers power and it curries favor. The influence of money is insidious and pervasive, and it is eating away the promise of democracy for all.

Our politicians pay homage to the bundlers; they crave endorsement from the millionaires; and, increasingly, they need anointment from the billionaires. And Rome burns. Then, when our so-called representatives have had their turn in the public limelight and in power, they retreat to the shadows, where as lobbyists and brokers they wield even greater power for the moneyed few. And Rome continues to burn.

So you know things must be rather dire if even huge swathes of capitalist corporate America want some form of significant campaign finance reform. You can read for yourself what the Committee for Economic Development of the Conference Board has to say in its scathing report, Crony Capitalism: Unhealthy Relations Between Business and Government.

From the Guardian:

Political corruption is eating our democracy out from the inside. Most Americans know that. But democratic and economic health can’t be easily disentangled. As it diminishes our public sphere and drowns out the myriad of citizen voices, it also sucks the energy and vitality from our economy. This causes pain to business owners.

According to a recent report from the Committee on Economic Development, an old, white-shoe non-partisan organization that came out of the aftermath of World War II (and was a booster for the Marshall Plan), the United States economy is increasingly represented by crony capitalism, not competitive capitalism.

Lobbyists and privately funded elections have, according to the CED: “exerted an important toll on the US economy”. They propose banning registered lobbyists from raising money for federal candidates and officeholders, and implementing strict revolving door policies.

Crony capitalism, the report details, leads to “rent-seeking through subsidies or taxes that benefit vested interests at the expense of others, rather than the pursuit of profit through socially and economically productive behavior”.

What is most striking about the report is who is behind it. The CEO of CED is former Romney supporter Steve Odland. A former top lobbyist for PepsiCo, a republican called Larry Thompson – someone I never thought I’d agree with – is endorsing the single most important structural reform in America: publicly financed elections.

Thompson is the Co-Chair of CED’s Sustainable Capitalism Subcommittee, a driver in the release of the report. Paul Atkins, another member of the CED board (and the sustainable capitalism subcommittee) was a Bush-appointed SEC Commissioner who opposed rules constraining hedge funds.

“Campaign finance reform could free elected officials from their dependence on private campaign funding. Such funding is seen as an important reason why elected officials might bend their views on policy issues away from the public interest” the report said.

I disagree with a big part of the report. I don’t think we should reduce the corporate tax rate. But the crony capitalism argument is right on point, and the most striking thing about the report is its full-throated endorsement of a public financing model. And, the report persuasively shows how our current model reduces competitiveness of the economy “by favoring insiders over outsiders” and “continues to sap vitality” out of our economic life.

We haven’t always had this problem. Until the 1980s, candidates spent a fraction of their time talking to donors; just a few weeks a year, a little more right before an election. True, they’d fund raise from the wealthy interests, as they do now, but it was a minuscule part of their job: policy and constituent services were the heart of the work.

 Read the entire story here.

Video: Money, money, money. ABBA. Courtesy of AbbaEVEO.

Send to Kindle

Corporate Grief

amazon-france-bannerFollowing the recent horrendous mass murders in Mali, Paris, and Lebanon (and elsewhere) there is a visible outpouring of grief, and on a worldwide scale. Many of us, while removed from direct involvement and having no direct connection to the victims and their families, still feel sadness, pain and loss.

The empathy expressed by strangers or distant acquaintances for those even remotely connected with the violence is tangible and genuine. For instance, we foreigners may seek out a long-lost French colleague to express our concern and condolences for Mali / France and all Bamakoans / Parisians. There is genuine concern and sense of connection, at a personal level, however frail that connection may be.

But what is going on when Amazon, Apple, eBay, Uber and other corporations wave their digital banners of solidarity — expressing grief — on the home pages of their websites?

Jessica Reed over at the Guardian makes some interesting observations. She is absolutely right to admonish those businesses that would seek to profit from such barbaric acts. In fact, we should boycott any found to be doing so. Some are taking real and positive action, such as enabling free communication or providing free transportation and products. However, she is also correct to warn us of the growing, insidious tendency to anthropomorphize and project sentience onto corporations.

Brands and companies increasingly love us, they sympathize, and now they grieve with us. But there is a vast difference from being hugged in sympathy by the boss of your local deli and the faceless, impersonal digital flag-waving courtesy of a dotcom home page.

Who knows where this will lead us decades from now: perhaps if there is money to be made, big corporations will terrorize us as well.

From Jessica Reed:

The pain is shared by all of us, but a golden rule should apply: don’t capitalise on grief, don’t profit from it. Perhaps this is why big companies imposing their sympathy on the rest of us leaves a bitter taste in my month: it is hard for me to see these gestures as anything but profiteering.

Companies are now posing as entities capable of compassion, never mind that they cannot possibly speak for all of its employees. This also brings us a step closer to endowing them with a human trait: the capacity to express emotions. They think they’re sentient.

If this sounds crazy, it’s because it is.

In the US, the debate about corporate personhood is ongoing. The supreme court already ruled that corporations are indeed people in some contexts: they have been granted the right to spend money on political issues, for example, as well as the right to refuse to cover birth control in their employee health plans on religious grounds.

Armed with these rulings, brands continue to colonise our lives, accompanying us from the cradle to the grave. They see you grow up, they see you die. They’re benevolent. They’re family.

Looking for someone to prove me wrong, I asked Ed Zitron, a PR chief executive, about these kinds of tactics. Zitron points out that tech companies are, in some cases, performing a useful service – as in Facebook’s “safety check”, T-Mobile and Verizon’s free communication with France, and Airbnb’s decision to compensate hosts for letting people stay longer for free. Those are tangible gestures – the equivalent of bringing grief-stricken neighbours meals to sustain them, rather than sending a hastily-written card.

Anything else, he says, is essentially good-old free publicity: “an empty gesture, a non-movement, a sanguine pretend-help that does nothing other than promote themselves”.

It’s hard to disagree with him and illustrates how far brands have further infiltrated our lives since the publication of Naomi Klein’s No Logo, which documented advertising as an industry not only interested in selling products, but also a dream and a message. We can now add “grief surfing” to the list.

A fear years back, Jon Stewart mocked this sorry state of affairs:

If only there were a way to prove that corporations are not people, show their inability to love, to show that they lack awareness of their own mortality, to see what they do when you walk in on them masturbating …

Turns out we can’t – companies will love you, in sickness and in health, for better and for worse, whether you want it or not.

 Read the entire article here.

Image: Screen grab from Amazon.fr, November 17, 2015.

Send to Kindle

Art and Money

Google-search-Damien-Hirst-Dots

The process through which an artist finds fortune and fame is a complex one, though to many of us — even those who have spent some time within the art world — it seems rather random and obscure. Raw talent alone will only carry an artist up the first rungs of the ladder of success. To gain the upper reaches requires and modicum of luck and lots of communication, connections, sales and marketing.

Unfortunately, for those artists who seek only to create and show their works (and perhaps even sell a few), the world of art is very much a business. It is driven by money, personality (of the artist or her proxies) and market power of a select few galleries, curators, critics, collectors, investors, and brokers. So, just like any other capitalist adventure the art market can be manoeuvered  and manipulated. As a result, a few artists become global superstars, while still living, their art taking on a financial life of its own; the remaining 99.999 percent — well, they’ll have to hold on to their day-jobs.

From WSJ:

Next month, British artist Damien Hirst—a former superstar whose prices plummeted during the recession—could pull off an unthinkable feat: By opening a free museum, called the Newport Street Gallery, in south London to display his private collection of other artists’ works, Mr. Hirst could salvage his own career.

Just as the new museum opens, an independent but powerful set of dealers, collectors and art advisers are quietly betting that a surge of interest in Mr. Hirst’s new endeavor could spill over into higher sales for his art. Some, like New York dealer Jose Mugrabi, are stockpiling Hirsts in hopes of reselling them for later profits, believing a fresh generation of art collectors will walk away wanting to buy their own Hirsts. Mr. Mugrabi, who helped mount successful comeback campaigns in the past for Andy Warhol, Jean-Michel Basquiat and Richard Prince, said he owns 120 pieces by Mr. Hirst, including $33 million of art he bought directly from the artist’s studio three months ago.

Other dealers, such as Pilar Ordovas, are organizing gallery shows that place Mr. Hirst’s work alongside still-popular artists, angling for a beneficial comparison.

New York art adviser Kim Heirston, whose clients include Naples collector Massimo Lauro, said she has been scouring for Hirsts at fairs and auctions alike. “I’m telling anybody who will listen to buy him because Damien Hirst is here to stay,” Ms. Heirston said.

If successful, their efforts could offer a real-time glimpse into the market-timing moves of the art-world elite, where the tastes of a few can still sway the opinions of the masses. Few marketplaces are as changeable as contemporary art. This is a realm where price levels for an artist can be catapulted in a matter of minutes by a handful of collectors in an auction. Those same champions can then turn around the following season and dump their stakes in the same artist, dismissing him as a sellout. Like fashion, the roster of coveted artists is continually being reshuffled in subtle ways.

Most artists with lengthy careers have seasons of ebb and flow, and collectors who sync their buying and selling can profit accordingly, experts say. Before the recession, Mr. Hirst, age 50, was an art-world darling, the leader of London’s 1990s generation of so-called Young British Artists who explored ideas about life and death in provocative, outsize ways. He is best known for covering canvases in dead butterflies and polka dots whose rainbow hues he color-coded to match chemical compounds found in drugs.

During the market’s last peak, collectors paid as much as $19 million at auction for his artworks, and he staffed multiple studios throughout the U.K. with as many as 100 studio assistants to help produce his works. Mr. Hirst is reportedly worth an estimated $350 million, thanks to his art sales but also his skill as a businessman, amassing an empire of real estate holdings in the U.K. and elsewhere. He also co-founded a publishing company called Other Criteria in 2005 that publishes art books, artist-designed clothing and prints of his works, as well as other emerging artists.

But his star fell sharply after he committed an art-world taboo by bypassing conventional sales channels—selling works slowly through galleries—and auctioned off nearly $200 million of his work directly at Sotheby’s in 2008. While the sale was successful and proved his popularity, it became his undoing. He irked his galleries and some longtime collectors, who felt he had flooded his own marketplace for a singular payout. These days, it’s “much riskier” to trade a Hirst at auction than it was a decade ago, according to Michael Moses, co-founder of an auction tracking firm called Beautiful Asset Advisors. Collectors who bought and resold his works since 2005 have mainly suffered losses, Mr. Moses added.

Read the entire story here.

Image: A collection of some of Damien Hirst’s “dot” works. Courtesy of Google Search.

 

Send to Kindle

Aspirational or Inspirational?

Both of my parents came from a background of chronic poverty and limited educational opportunity. They eventually overcame these constraints through a combination of hard work, persistence and passion. They instilled these traits in me, and somehow they did so in a way that fostered a belief in a well-balanced life containing both work and leisure.

But to many, especially in the United States, the live-to-work ethic thrives. This condition is so acute and prevalent that most Americans caught in corporate jobs never take their full — and yet meager by global standards — allotment of annual vacation. Our culture is replete with tales of driven, aspirational parents — think dragon mom — who seem to have their kid’s lives mapped out from the crib.

I have to agree with columnist George Monbiot: while naked ambition may gain our children monetary riches and a higher rung on the corporate ladder it does not a life make.

From the Guardian:

Perhaps because the alternative is too hideous to contemplate, we persuade ourselves that those who wield power know what they are doing. The belief in a guiding intelligence is hard to shake.

We know that our conditions of life are deteriorating. Most young people have little prospect of owning a home, or even of renting a decent one. Interesting jobs are sliced up, through digital Taylorism, into portions of meaningless drudgery. The natural world, whose wonders enhance our lives, and upon which our survival depends, is being rubbed out with horrible speed. Those to whom we look for guardianship, in government and among the economic elite, do not arrest this decline, they accelerate it.

The political system that delivers these outcomes is sustained by aspiration: the faith that if we try hard enough we could join the elite, even as living standards decline and social immobility becomes set almost in stone. But to what are we aspiring? A life that is better than our own, or worse?

Last week a note from an analyst at Barclays’ Global Power and Utilities group in New York was leaked. It addressed students about to begin a summer internship, and offered a glimpse of the toxic culture into which they are inducted.

“I wanted to introduce you to the 10 Power Commandments … For nine weeks you will live and die by these … We expect you to be the last ones to leave every night, no matter what … I recommend bringing a pillow to the office. It makes sleeping under your desk a lot more comfortable … the internship really is a nine-week commitment at the desk … an intern asked our staffer for a weekend off for a family reunion – he was told he could go. He was also asked to hand in his BlackBerry and pack up his desk … Play time is over and it’s time to buckle up.”

Play time is over, but did it ever begin? If these students have the kind of parents featured in the Financial Times last month, perhaps not. The article marked a new form of employment: the nursery consultant. These people, who charge from £290 an hour, must find a nursery that will put their clients’ toddlers on the right track to an elite university.

They spoke of parents who had already decided that their six-month-old son would go to Cambridge then Deutsche Bank, or whose two-year-old daughter “had a tutor for two afternoons a week (to keep on top of maths and literacy) as well as weekly phonics and reading classes, drama, piano, beginner French and swimming. They were considering adding Mandarin and Spanish. ‘The little girl was so exhausted and on edge she was terrified of opening her mouth.’”

In New York, playdate coaches charging $450 an hour train small children in the social skills that might help secure their admission to the most prestigious private schools. They are taught to hide traits that could suggest they’re on the autistic spectrum, which might reduce their chances of selection.

From infancy to employment, this is a life-denying, love-denying mindset, informed not by joy or contentment, but by an ambition that is both desperate and pointless, for it cannot compensate for what it displaces: childhood, family life, the joys of summer, meaningful and productive work, a sense of arrival, living in the moment. For the sake of this toxic culture, the economy is repurposed, the social contract is rewritten, the elite is released from tax, regulation and the other restraints imposed by democracy.

Where the elite goes, we are induced to follow. As if the assessment regimes were too lax in UK primary schools, last year the education secretary announced a new test for four-year-olds. A primary school in Cambridge has just taken the obvious next step: it is now streaming four-year-olds into classes according to perceived ability. The education and adoption bill, announced in the Queen’s speech, will turn the screw even tighter. Will this help children, or hurt them?

Read the entire column here.

Send to Kindle

Anthropo-Fracking — Monetizing You

While not known as retail innovators banks started charging us all manner of fees for every minutiae some time ago: the bounced check fee, the monthly checking fee, the statement fee, the paperwork fee, the outgoing wire fee, the incoming wire fee, the secondary account fee, the document discovery fee, the check copy fee, etc.

Then airlines jumped on the bandwagon: their cunning ploy to awe us with low fares while simultaneously shocking us with all manner of “ancillary fees”: the checked bag fee, the excess baggage fee, the large baggage fee, the food fee, the drink fee, the ticketing fee, the wifi fee, the check-in early fee, the seat selection fee, the group fee, the fee-fie-fo-fum fee, etc etc.

So, while you may believe that you are a valuable and marketable brand of one, most enterprises actually look upon you something more lowly, but financially attractive — you are nothing more than a cow to be milked, or a landscape to be fracked, of fees. Sadly, this movement towards “personal-fracking” — the monetization and mining of you — has only just entered its early stages. So, hold on tight to your wallet.

From the Guardian:

Fracking. Could there be a more perfect model for how we’re getting rinsed by this current conspiracy of government and commerce? In a world turned upside down, “conservative” now means the absolute opposite of “leaving things as they are”. Conservative means changing everything. It means dismantling things and selling off the bits. It means drilling into our lives and extracting the marrow.

Conservatism and conservation are now about as far apart as it’s possible to get. Friends of Conservation are the ones protecting the countryside. The ones who stand around self-consciously in terrible fancy dress, holding passive-aggressive placards in praise of the noble, selfless badger. Or basically any mammal that looks good in a waistcoat.

Friends of Conservatism, on the other hand, are the ones who roll up on heavy machinery like a pissed Ukrainian militia. The ones who drill deep beneath that area of local countryside whose only “use” so far has been as a picnic site. And who then pump into the ground powerful jets of high-pressure hydrogunk, splintering rock as easily as a walnut. And who, having sucked up a sky’s worth of valuable gas through a massive crack pipe, then pack up and lumber off to fracture and steal someone else’s underground treasure.

Welcome to capitalism’s late late show. If you can power-hose the last drop of value out of something, you now have an amoral imperative to do it. Fracking is the chief inspiration for today’s entrepreneurs, those “heroic wealth creators” so admired by Andy Pandery Burnham and half the Labour party. Everything is up for grabs now. The age of the racketeer is over. It’s all about fracketeering now.

A gang of London estate agents has invented something called a “client progression feeHere is a recent example. A gang of London estate agents has invented something called a “client progression fee”. Yeah, ha ha, the cheeky peaky blinders are leaching an extra grand and a half out of buyers just for accepting their offer on a property. Imagine that. Charging people for agreeing to sell them something. Arbitrarily monetising something that customers are obliged to do anyway.

It’s almost as if the property industry is a pirate economy serviced by unscrupulous thieving bastards drenched in melancholy duty-free fragrances. Let’s face it, estate agents have pretty much perfected the art of taking the piss with a straight face. One former estate agent told me the other day he was always instructed to make admin fees “whatever you think you can get away with … go high, then drop as a favour”. Classic surcharge frackery.

I had decided that of all the agents – sports, double, biological – estate agents were definitely the worst. Then I asked people on Twitter how they had been fracked over lately and they reminded me about letting agents. And about how every single person I’ve ever known who has had any dealings with a letting agent has had to recalibrate their view of the human race as a result. Has anyone ever got their exorbitant deposit back in full without an exhausting argument pointing out that three years of normal wear and tear can’t be classed as catastrophic damage? I’ve been hearing about people being charged a £90-per-person “reference fee” when moving between two properties run by the same agent, “so that’s £180 to ask themselves how we were as tenants”. Or being charged £50 for printing six pages of a rental contract. “I asked them to email it so I could print it. They said no.”

The world of fracketeering is infinitely flexible and contradictory. Buy tickets online and you could be charged an admin fee for an attachment that requires you to print them at home. The original online booking fee – you’ve come this far in the buying process, hand over an extra 12 quid now or write off the previous 20 minutes of your life – has mutated into exotic versions of itself.

The confirmation fee. The convenience fee. Someone who bought tickets for a tennis event at the O2 sent me this pithy tweet: “4 tickets. 4 Facility Fees + 4 Service Charge + 1 Standard Mail £2.75 = 15% of overall £!”. Definitely a grand slam.

It’s amazing to think of a world that existed before the admin charge. It almost makes you nostalgic for a simpler and more innocent time, when racketeers would work out what it was we wanted and then supply it at an inflated price. You remember racketeers. Snappy dressers, little moustaches, connections to organised crime. Some of them did very well and went on to become successful publishers or peers of the realm. Quite a few old-school racketeers went into the “hospitality and leisure” business, where these days fracking is in full effect.

Read the entire story here.

 

Send to Kindle

The Greatest Fear

We are often told and then reminded that the rich are not that different from the poor. Though, the storytellers weaving these narratives are usually organs of the rich, of course.

While I’m lucky to have had the education and initiative to rise above the poverty that my parents endured — I would categorize myself as “in between” — I have to gulp incredulously at the utter insensitivity of some who seem to have it all, and yet want more.

One very rich gentleman reminds us that (some) rich people are indeed very different from the poor. Let’s look at Johann Rupert’s (owner of Cartier and other luxury brands) biggest fear, which would seem to be rather different from the more pressing fears of the poor, and for that matter, the remaining 99 percent (think: food, health care, shelter, transportation etc etc).

From the Independent:

The multi-billionaire owner of luxury jewellery company Cartier has revealed his greatest fear – robots replacing workers and the poor rising up to bring down the rich.

Speaking at the Financial Times Business of Luxury Summit in Monaco (obviously), the fashion tycoon told his fellow elite that he can’t sleep at the thought of the social upheaval he thinks is imminent.

According to Bloomberg, Johann Rupert told the conference to bear in mind that when the poor rise up, the middle classes won’t want to buy luxury goods for fear of exposing their wealth.

He said he had been reading about changes in labour technology, as well as recent Oxfam figures suggesting the top 1 per cent of the global population now owns more wealth than the other 99 per cent.

“How is society going to cope with structural unemployment and the envy, hatred and the social warfare?” he said. “We are destroying the middle classes at this stage and it will affect us. It’s unfair. So that’s what keeps me awake at night.”

Read the entire story here.

Send to Kindle

Professional Trolling

Just a few short years ago the word “troll” in the context of the internet had not even entered our lexicon. Now, you can enter a well-paid career in the distasteful practice, especially if you live in Russia. You have to admire the human ability to find innovative and profitable ways to inflict pain on others.

From NYT:

Around 8:30 a.m. on Sept. 11 last year, Duval Arthur, director of the Office of Homeland Security and Emergency Preparedness for St. Mary Parish, Louisiana, got a call from a resident who had just received a disturbing text message. “Toxic fume hazard warning in this area until 1:30 PM,” the message read. “Take Shelter. Check Local Media and columbiachemical.com.”

St. Mary Parish is home to many processing plants for chemicals and natural gas, and keeping track of dangerous accidents at those plants is Arthur’s job. But he hadn’t heard of any chemical release that morning. In fact, he hadn’t even heard of Columbia Chemical. St. Mary Parish had a Columbian Chemicals plant, which made carbon black, a petroleum product used in rubber and plastics. But he’d heard nothing from them that morning, either. Soon, two other residents called and reported the same text message. Arthur was worried: Had one of his employees sent out an alert without telling him?

If Arthur had checked Twitter, he might have become much more worried. Hundreds of Twitter accounts were documenting a disaster right down the road. “A powerful explosion heard from miles away happened at a chemical plant in Centerville, Louisiana #ColumbianChemicals,” a man named Jon Merritt tweeted. The #ColumbianChemicals hashtag was full of eyewitness accounts of the horror in Centerville. @AnnRussela shared an image of flames engulfing the plant. @Ksarah12 posted a video of surveillance footage from a local gas station, capturing the flash of the explosion. Others shared a video in which thick black smoke rose in the distance.

Dozens of journalists, media outlets and politicians, from Louisiana to New York City, found their Twitter accounts inundated with messages about the disaster. “Heather, I’m sure that the explosion at the #ColumbianChemicals is really dangerous. Louisiana is really screwed now,” a user named @EricTraPPP tweeted at the New Orleans Times-Picayune reporter Heather Nolan. Another posted a screenshot of CNN’s home page, showing that the story had already made national news. ISIS had claimed credit for the attack, according to one YouTube video; in it, a man showed his TV screen, tuned to an Arabic news channel, on which masked ISIS fighters delivered a speech next to looping footage of an explosion. A woman named Anna McClaren (@zpokodon9) tweeted at Karl Rove: “Karl, Is this really ISIS who is responsible for #ColumbianChemicals? Tell @Obama that we should bomb Iraq!” But anyone who took the trouble to check CNN.com would have found no news of a spectacular Sept. 11 attack by ISIS. It was all fake: the screenshot, the videos, the photographs.

 In St. Mary Parish, Duval Arthur quickly made a few calls and found that none of his employees had sent the alert. He called Columbian Chemicals, which reported no problems at the plant. Roughly two hours after the first text message was sent, the company put out a news release, explaining that reports of an explosion were false. When I called Arthur a few months later, he dismissed the incident as a tasteless prank, timed to the anniversary of the attacks of Sept. 11, 2001. “Personally I think it’s just a real sad, sick sense of humor,” he told me. “It was just someone who just liked scaring the daylights out of people.” Authorities, he said, had tried to trace the numbers that the text messages had come from, but with no luck. (The F.B.I. told me the investigation was still open.)

The Columbian Chemicals hoax was not some simple prank by a bored sadist. It was a highly coordinated disinformation campaign, involving dozens of fake accounts that posted hundreds of tweets for hours, targeting a list of figures precisely chosen to generate maximum attention. The perpetrators didn’t just doctor screenshots from CNN; they also created fully functional clones of the websites of Louisiana TV stations and newspapers. The YouTube video of the man watching TV had been tailor-made for the project. A Wikipedia page was even created for the Columbian Chemicals disaster, which cited the fake YouTube video. As the virtual assault unfolded, it was complemented by text messages to actual residents in St. Mary Parish. It must have taken a team of programmers and content producers to pull off.

And the hoax was just one in a wave of similar attacks during the second half of last year. On Dec. 13, two months after a handful of Ebola cases in the United States touched off a minor media panic, many of the same Twitter accounts used to spread the Columbian Chemicals hoax began to post about an outbreak of Ebola in Atlanta. The campaign followed the same pattern of fake news reports and videos, this time under the hashtag #EbolaInAtlanta, which briefly trended in Atlanta. Again, the attention to detail was remarkable, suggesting a tremendous amount of effort. A YouTube video showed a team of hazmat-suited medical workers transporting a victim from the airport. Beyoncé’s recent single “7/11” played in the background, an apparent attempt to establish the video’s contemporaneity. A truck in the parking lot sported the logo of the Hartsfield-Jackson Atlanta International Airport.

On the same day as the Ebola hoax, a totally different group of accounts began spreading a rumor that an unarmed black woman had been shot to death by police. They all used the hashtag #shockingmurderinatlanta. Here again, the hoax seemed designed to piggyback on real public anxiety; that summer and fall were marked by protests over the shooting of Michael Brown in Ferguson, Mo. In this case, a blurry video purports to show the shooting, as an onlooker narrates. Watching it, I thought I recognized the voice — it sounded the same as the man watching TV in the Columbian Chemicals video, the one in which ISIS supposedly claims responsibility. The accent was unmistakable, if unplaceable, and in both videos he was making a very strained attempt to sound American. Somehow the result was vaguely Australian.

Who was behind all of this? When I stumbled on it last fall, I had an idea. I was already investigating a shadowy organization in St. Petersburg, Russia, that spreads false information on the Internet. It has gone by a few names, but I will refer to it by its best known: the Internet Research Agency. The agency had become known for employing hundreds of Russians to post pro-Kremlin propaganda online under fake identities, including on Twitter, in order to create the illusion of a massive army of supporters; it has often been called a “troll farm.” The more I investigated this group, the more links I discovered between it and the hoaxes. In April, I went to St. Petersburg to learn more about the agency and its brand of information warfare, which it has aggressively deployed against political opponents at home, Russia’s perceived enemies abroad and, more recently, me.

Read the entire article here.

Send to Kindle

Baroness Thatcher and the Media Baron

The cozy yet fraught relationship between politicians and powerful figures in the media has been with us since the first days of newsprint. It’s a delicate symbiosis of sorts — the politician needs the media magnate to help acquire and retain power; the media baron needs the politician to shape and centralize it. The underlying motivations seem similar for both parties, hence the symbiosis — self-absorbtion, power, vanity.

So, it comes as no surprise to read intimate details of the symbiotic Rupert Murdoch / Margaret Thatcher years. Prime minister Thatcher would sometimes actively, but often surreptitiously, support Murdoch’s megalomaniacal desire to corner the UK (and global) media, while Murdoch would ensure his media channeled appropriately Thatcher-friendly news, spin and op-ed. But the Thatcher-Murdoch story is just one of the latest in a long line of business deals between puppet and puppet-master [you may decide which is which, dear reader]. Over the last hundred years we’ve had William Randolph Hearst and Roosevelt, Lloyd George and Northcliffe, Harold Wilson and Robert Maxwell, Baldwin and Beaverbrook.

Thomas Jefferson deplored newspapers — seeing them as vulgar and cancerous. His prescient analysis of the troubling and complex relationship between the news and politics is just as valid today, “an evil for which there is no remedy; our liberty depends on the freedom of the press, and this cannot be limited without being lost”.

Yet for all the grievous faults and dubious shenanigans of the brutish media barons and their fickle political spouses, the Thatcher-Murdoch story is perhaps not as sinister as one might first think. We now live in an age where faceless corporations and billionaires broker political power and shape policy behind mountains of money, obfuscated institutions and closed doors. This is far more troubling for our democracies. I would rather fight an evil that has a face.

From the Guardian:

The coup that transformed the relationship between British politics and journalism began at a quiet Sunday lunch at Chequers, the official country retreat of the prime minister, Margaret Thatcher. She was trailing in the polls, caught in a recession she had inherited, eager for an assured cheerleader at a difficult time. Her guest had an agenda too. He was Rupert Murdoch, eager to secure her help in acquiring control of nearly 40% of the British press.

Both parties got what they wanted.

The fact that they met at all, on 4 January 1981, was vehemently denied for 30 years. Since their lie was revealed, it has been possible to uncover how the greatest extension of monopoly power in modern press history was planned and executed with such furtive brilliance.

All the wretches in the subsequent hacking sagas – the predators in the red-tops, the scavengers and sleaze merchants, the blackmailers and bribers, the liars, the bullies, the cowed politicians and the bent coppers – were but the detritus of a collapse of integrity in British journalism and political life. At the root of the cruelties and extortions exposed in the recent criminal trials at the Old Bailey, was Margaret Thatcher’s reckless engorgement of the media power of her guest that January Sunday. The simple genesis of the hacking outrages is that Murdoch’s News International came to think it was above the law, because it was.

Thatcher achieved much as a radical prime minister confronted by political turmoil and economic torpor. So did Murdoch, in his liberation of British newspapers from war with the pressroom unions, and by wresting away the print unions’ monopoly of access to computer technology. I applauded his achievements, and still do, as I applauded many of Thatcher’s initiatives when I chaired the editorial boards of the Sunday Times (1967-81) and then the Times (1981-2). It is sad that her successes are stained by recent evidence of her readiness to ensure sunshine headlines for herself in the Murdoch press (especially when it was raining), at a heavy cost to the country. She enabled her guest to avoid a reference to the Monopolies and Mergers Commission, even though he already owned the biggest-selling daily newspaper, the Sun, and the biggest selling Sunday newspaper, the News of the World, and was intent on acquiring the biggest-selling quality weekly, the Sunday Times, and its stablemate, the Times. 

 Times Newspapers had long cherished their independence. In 1966, when the Times was in financial difficulty, the new owner who came to the rescue, Lord Roy Thomson of Fleet, promised to sustain it as an independent non-partisan newspaper – precisely how he had conducted the profitable Sunday Times. Murdoch was able to acquire both publications in 1981 only because he began making solemn pledges that he would maintain the tradition of independence. He broke every one of those promises in the first years. His breach of the undertakings freely made for Times Newspapers was a marked contrast with the independent journalism we at the Sunday Times (and William Rees-Mogg at the Times) had enjoyed under the principled ownership of the Thomson family. Thatcher was a vital force in reviving British competitiveness, but she abetted a concentration of press power that became increasingly arrogant and careless of human dignity in ways that would have appalled her, had she remained in good health long enough to understand what her actions had wrought.

Documents released by the Thatcher Archive Trust, now housed at Churchill College, Cambridge, give the lie to a litany of Murdoch-Thatcher denials about collusion during the bidding for Times Newspapers. They also expose a crucial falsehood in the seventh volume of The History of the Times: The Murdoch Years – the official story of the newspaper from 1981-2002, published in 2005 by the Murdoch-owned HarperCollins. In it Graham Stewart wrote, in all innocence, that Murdoch and Thatcher “had no communication whatsoever during the period in which the Times bid and presumed referral to the Monopolies and Mergers Commission was up for discussion”.

Read the entire story here.

 

Send to Kindle

Money Can Buy You… (Some) Happiness

Google-search-moneyNew results are in, and yes, money can buy you happiness. But the picture from some extensive new research shows that your happiness is much more dependent on how you spend it, than how much your earn. Generally, you are more likely to be happier if you give money away rather than fritter it on yourself. Also, you are more likely to be happier if you spend it on an experience rather than things.

From the WSJ:

It’s an age-old question: Can money buy happiness?

Over the past few years, new research has given us a much deeper understanding of the relationship between what we earn and how we feel. Economists have been scrutinizing the links between income and happiness across nations, and psychologists have probed individuals to find out what really makes us tick when it comes to cash.

The results, at first glance, may seem a bit obvious: Yes, people with higher incomes are, broadly speaking, happier than those who struggle to get by.

But dig a little deeper into the findings, and they get a lot more surprising—and a lot more useful.

In short, this latest research suggests, wealth alone doesn’t provide any guarantee of a good life. What matters a lot more than a big income is howpeople spend it. For instance, giving money away makes people a lot happier than lavishing it on themselves. And when they do spend money on themselves, people are a lot happier when they use it for experiences like travel than for material goods.

With that in mind, here’s what the latest research says about how people can make smarter use of their dollars and maximize their happiness.

Experiences Are Worth More Than You Think

Ryan Howell was bothered by a conundrum. Numerous studies conducted over the past 10 years have shown that life experiences give us more lasting pleasure than material things, and yet people still often deny themselves experiences and prioritize buying material goods.

So, Prof. Howell, associate professor of psychology at San Francisco State University, decided to look at what’s going on. In a study published earlier this year, he found that people think material purchases offer better value for the money because experiences are fleeting, and material goods last longer. So, although they’ll occasionally splurge on a big vacation or concert tickets, when they’re in more money-conscious mode, they stick to material goods.

But in fact, Prof. Howell found that when people looked back at their purchases, they realized that experiences actually provided better value.

“What we find is that there’s this huge misforecast,” he says. “People think that experiences are only going to provide temporary happiness, but they actually provide both more happiness and more lasting value.” And yet we still keep on buying material things, he says, because they’re tangible and we think we can keep on using them.

Cornell University psychology professor Thomas Gilovich has reached similar conclusions. “People often make a rational calculation: I have a limited amount of money, and I can either go there, or I can have this,” he says. “If I go there, it’ll be great, but it’ll be done in no time. If I buy this thing, at least I’ll always have it. That is factually true, but not psychologically true. We adapt to our material goods.”

It’s this process of “hedonic adaptation” that makes it so hard to buy happiness through material purchases. The new dress or the fancy car provides a brief thrill, but we soon come to take it for granted.

Experiences, on the other hand, tend to meet more of our underlying psychological needs, says Prof. Gilovich. They’re often shared with other people, giving us a greater sense of connection, and they form a bigger part of our sense of identity. If you’ve climbed in the Himalayas, that’s something you’ll always remember and talk about, long after all your favorite gadgets have gone to the landfill.

Read the entire article here.

Image courtesy of Google Search.

Send to Kindle

It’s Official: The U.S. is an Oligarchy

US_Capitol_west_side

Until recently the term oligarchy was usually only applied to Russia and some ex-Soviet satellites. A new study out of Princeton and Northwestern universities makes a case for the oligarchic label right here in the United States. Jaded voters will yawn at this so-called news — most ordinary citizens have known for decades that the U.S. political system is thoroughly broken, polluted with money (“free speech” as the U.S. Supreme Court would deem it) and serves only special interests (on the right or the left).

From the Telegraph:

The US government does not represent the interests of the majority of the country’s citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern Universities has concluded.

The report, entitled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, used extensive policy data collected from between the years of 1981 and 2002 to empirically determine the state of the US political system.

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.

The peer-reviewed study, which will be taught at these universities in September, says: “The central point that emerges from our research is that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while mass-based interest groups and average citizens have little or no independent influence.”

Researchers concluded that US government policies rarely align with the the preferences of the majority of Americans, but do favour special interests and lobbying oragnisations: “When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it.”

The positions of powerful interest groups are “not substantially correlated with the preferences of average citizens”, but the politics of average Americans and affluent Americans sometimes does overlap. This merely a coincidence, the report says, with the the interests of the average American being served almost exclusively when it also serves those of the richest 10 per cent.

The theory of “biased pluralism” that the Princeton and Northwestern researchers believe the US system fits holds that policy outcomes “tend to tilt towards the wishes of corporations and business and professional associations.”

Read more here.

Image: U.S. Capitol. Courtesy of Wikipedia.

Send to Kindle

$28,000 Per Night

The New York Palace - Jewel Suite

A seven-night stay at an ultra-luxurious hotel suite for the super-rich will set you back a staggering $200,000. To put it into perspective, this is just slightly over $196,500 — the median U.S house price at the end of 2013. The Jewel Suite by Martin Katz at the New York Palace hotel commands a princely sum of $28,000 per night.

From the NYT:

In most hotels, luxury is measured by the thread count of the linens (minimum 400, please) or the brand of the bathroom toiletries. But for those at the highest end of the market, where the only restraint on consumption is how conspicuous they want to be, a race to the top has broken out, with hotels outdoing one another to serve this tiny, if highly visible, niche.

Take the Jewel Suite by Martin Katz at the New York Palace, one of two recently opened specialty suites. The three-story, 5,000-square-foot space — a sort of penthouse Versailles — itself resembles a jewel box, albeit one with its own private elevator and views of the Empire State and Chrysler Buildings.

It’s hard to imagine Louis XIV being left wanting. The floor in the entryway is glittering black marble arranged in a sunburst pattern, while a 20-foot crystal chandelier hangs from the ceiling. The living room sofa is a brilliant sapphire blue and a tufted ivory chaise has a pearlescent sheen. Two floors up, in a second living room next to a vast private terrace, the wet bar (one of two in the suite) and half-bath are swathed in a sparkling wall covering, and an angular lavender sofa calls to mind an amethyst crystal. Iridescent tiles lining the private rooftop hot tub give the impression of sinking into a giant opal.

And then there are the jewels themselves: More than a million dollars of the jewelry designer’s work is displayed in five museum-like cases in the entryway, and a boudoir area in the master suite has lighting and floor-to-ceiling mirrors designed specifically for jewelry showings.

Such grandeur — or excess, depending on your point of view — is all there for the taking, starting at $25,000 a night.

“There is a very narrow market who want nothing less,” said Scott Berman, the United States hospitality and leisure practice leader at PricewaterhouseCoopers. “Price is not an issue. We’re talking about the jet set of the jet sets — high-net-worth individuals, generally foreign travelers in the U.S. who are accustomed to opulence.”

“It’s bragging rights,” said Pam Danziger, president of the luxury marketing firm Unity Marketing and author of “Putting the Luxe Back in Luxury,” published in 2011.

“I think this is just a matter of other brands trying to play catch-up to that. They don’t want to be the only hotel on the block that doesn’t have this super, super high-end offering.”

In New York, the race to capture the highest end of the market continues. In November, the Mandarin Oriental, New York, opened a 3,300-square-foot suite that includes floor-to-ceiling windows and a dining room that seats 10; its rate is $28,000 a night. The Loews Regency Hotel in New York reopened last week after a yearlong, $100 million renovation, and six one-of-a-kind suites will open in April. (Rates haven’t been set yet.)

“We want to present an image that’s commensurate with the new product,” said Jonathan Tisch, chairman of Loews Hotels. “By doing six different designs, we can create a sense of luxury in six different ways.”

“We’ve seen more and more boutique hotels and the bigger-name hotels making suites that are one-off,” said Kris Fuchs, principal at Suite New York, a furniture showroom involved in the Regency’s suite renovation. “I think it makes it extra special that you’re in a room no one else in the hotel has.”

This trend of super-suites had overseas antecedents, with demand driven by a growing cadre of the ultra-rich from around the world.

“Some of the major European capitals have had this going on in the past few years,” said David Loeb, a senior hotel analyst at Robert W. Baird & Company.

Ms. Danziger said the trend started in places like Singapore, London and major Middle Eastern cities. “You find that the new money types are the kinds given to this excessive display, valuing the display of this excessive, over-the-top consumption,” she said. “Subtlety is not appreciated.”

In the United States, this luxury race took longer to get going, in part because of the recession and a resistance to overt displays of wealth. But now, any such concerns have given way. It is perhaps most noticeable in New York City’s thriving hotel market, although spaces with similar square footage and amenities (if slightly less stratospheric rates) are surfacing in cities including Las Vegas, Miami and Dallas.

“Development is strong again,” said David Chase, general manager of the New York Palace. After struggling through the aftermath of the recession, luxury hotels are recovering and investing in capital improvements.

This week, the Ritz-Carlton in Dallas will open a 5,135-square-foot suite wing, including three adjoining suites and two rooms, for travelers who bring an entourage. “We found this need for this private area,” its general manager, Roberto van Geenen, said. Multiple interconnected spaces make it more convenient to house the phalanx of nannies, assistants, bodyguards, personal chefs and other attendants that the super-wealthy bring with them on trips.

“There are more and more hotels in that market, in Miami in particular, that are competing for very high-end leisure travelers,” Mr. Loeb said. “The growth of international travel is affecting many of the major markets in the U.S.”

“Without question this will increase the prestige of the hotel,” said John Laclé, general manager of the Hilton Bentley Miami/South Beach in Miami Beach, which opened a 3,000-square-foot penthouse in December.

Hotel industry professionals say these over-the-top suites serve a dual purpose. “A large part of what we do is creating an image,” Mr. Tisch said. Super-suites cater to the needs of billionaire travelers as well as the imaginations of middle-class tourists.

“This hotel already had a fantastic flow of high-net-worth people using our suites,” Mr. Chase said, listing Saudi diplomats and royalty, as well as Hollywood and sports stars, as regular guests.

Read the entire story here.

Image: The New York Palace – Dining room, Jewel Suite by Martin Katz. Courtesy of Martin Katz / The New York Palace.

Send to Kindle

What’s Up With Bitcoin?

The digital, internet currency Bitcoin seems to be garnering much attention recently from some surprising corners, and it’s beyond speculators and computer geeks. Why?

From the Guardian:

The past weeks have seen a surprising meeting of minds between chairman of the US Federal Reserve Ben Bernanke, the Bank of England, the Olympic-rowing and Zuckerberg-bothering Winklevoss twins, and the US Department of Homeland Security. The connection? All have decided it’s time to take Bitcoin seriously.

Until now, what pundits called in a rolling-eye fashion “the new peer-to-peer cryptocurrency” had been seen just as a digital form of gold, with all the associated speculation, stake-claiming and even “mining”; perfect for the digital wild west of the internet, but no use for real transactions.

Bitcoins are mined by computers solving fiendishly hard mathematical problems. The “coin” doesn’t exist physically: it is a virtual currency that exists only as a computer file. No one computer controls the currency. A network keeps track of all transactions made using Bitcoins but it doesn’t know what they were used for – just the ID of the computer “wallet” they move from and to.

Right now the currency is tricky to use, both in terms of the technological nous required to actually acquire Bitcoins, and finding somewhere to spend them. To get them, you have to first set up a wallet, probably online at a site such as Blockchain.info, and then pay someone hard currency to get them to transfer the coins into that wallet.

A Bitcoin payment address is a short string of random characters, and if used carefully, it’s possible to make transactions anonymously. That’s what made it the currency of choice for sites such as the Silk Road and Black Market Reloaded, which let users buy drugs anonymously over the internet. It also makes it very hard to tax transactions, despite the best efforts of countries such as Germany, which in August declared that Bitcoin was “private money” in which transactions should be taxed as normal.

It doesn’t have all the advantages of cash, though the fact you can’t forge it is a definite plus: Bitcoin is “peer-to-peer” and every coin “spent” is authenticated with the network. Thus you can’t spend the same coin in two different places. (But nor can you spend it without an internet connection.) You don’t have to spend whole Bitcoins: each one can be split into 100m pieces (each known as a satoshi), and spent separately.

Although most people have now vaguely heard of Bitcoin, you’re unlikely to find someone outside the tech community who really understands it in detail, let alone accepts it as payment. Nobody knows who invented it; its pseudonymous creator, Satoshi Nakamoto, hasn’t come forward. He or she may not even be Japanese but certainly knows a lot about cryptography, economics and computing.

It was first presented in November 2008 in an academic paper shared with a cryptography mailing list. It caught the attention of that community but took years to take off as a niche transaction tool. The first Bitcoin boom and bust came in 2011, and signalled that it had caught the attention of enough people for real money to get involved – but also posed the question of whether it could ever be more than a novelty.

The algorithm for mining Bitcoins means the number in circulation will never exceed 21m and this limit will be reached in around 2140. Already 57% of all Bitcoins have been created; by 2017, 75% will have been. If you tried to create a Bitcoin in 2141, every other computer on the network would reject it as fake because it would not have been made according to the rules of currency.

The number of companies taking Bitcoin payments is increasing from a small base, and a few payment processors such as Atlanta-based Bitpay are making real money from the currency. But it’s difficult to get accurate numbers on conventional transactions, and it still seems that the most popular uses of Bitcoins are buying drugs in the shadier parts of the internet, as people did on the Silk Road website, and buying the currency in the hope that in a few weeks’ time you will be able to sell it at a profit.

This is remarkable because there’s no fundamental reason why Bitcoin should have any value at all. The only reason people are willing to pay money for the currency is because other people are willing to as well. (Try not to think about it too hard.) Now, though, sensible economists are saying that Bitcoin might become part of our future economy. That’s quite a shift from October last year, when the European Central Bank said that Bitcoin was “characteristic of a Ponzi [pyramid] scheme”. This month, the Chicago Federal Reserve commented that the currency was “a remarkable conceptual and technical achievement, which may well be used by existing financial institutions (which could issue their own bitcoins) or even by governments themselves”.

It might not sound thrilling. But for a central banker, that’s like yelling “BITCOIIINNNN!” from the rooftops. And Bernanke, in a carefully dull letter to the US Senate committee on Homeland Security, said that when it came to virtual currencies (read: Bitcoin), the US Federal Reserve had “ongoing initiatives” to “identify additional areas of … concern that require heightened attention by the banking organisations we supervise”.

In other words, Bernanke is ready to make Bitcoin part of US currency regulation – the key step towards legitimacy.

Most reporting about Bitcoin until now has been of its extraordinary price ramp – from a low of $1 in 2011 to more than $900 earlier this month. That massive increase has sparked a classic speculative rush, with more and more people hoping to get a piece of the pie by buying and then selling Bitcoins. Others are investing thousands of pounds in custom “mining rigs”, computers specially built to solve the mathematical problems necessary to confirm a Bitcoin transaction.

But bubbles can burst: in 2011 it went from $33 to $1. The day after hitting that $900 high, Bitcoin’s value halved on MtGox, the biggest exchange. Then it rose again.

Speculative bubbles happen everywhere, though, from stock markets to Beanie Babies. All that’s needed is enough people who think that they are the smart money, and that everyone else is sufficiently stupid to buy from them. But the Bitcoin bubbles tell us as much about the usefulness of the currency itself as the tulip mania of 17th century Holland did about flower-arranging.

History does provide some lessons. While the Dutch were selling single tulip bulbs for 10 times a craftsman’s annual income, the British were panicking about their own economic crisis. The silver coinage that had been the basis of the national economy for centuries was rapidly becoming unfit for purpose: it was constrained in supply and too easy to forge. The economy was taking on the features of a modern capitalist state, and the currency simply couldn’t catch up.

Describing the problem Britain faced then, David Birch, a consultant specialising in electronic transactions, says: “We had a problem in matching the nature of the economy to the nature of the money we used.” Birch has been talking about electronic money for over two decades and is convinced that we find ourselves on the edge of the same shift that occurred 400 years ago.

The cause of that shift is the internet, because even though you might want to, you can’t use cash – untraceable, no-fee-charged cash – online. Existing payment systems such as PayPal and credit cards demand a cut. So for individuals looking for a digital equivalent of cash – no middleman, quick, easy – Bitcoin looks pretty good.

In 1613, as people looked for a replacement for silver, Birch says, “we might have been saying ‘the idea of tulip bulbs as an asset class looks pretty good, but this central bank nonsense will never catch on.’ We knew we needed a change, but we couldn’t tell which made sense.” Back then, the currency crisis was solved with the introduction first of Isaac Newton’s Royal Mint (“official” silver and gold) and later with the creation of the Bank of England (“official” paper money that could in theory be swapped for official silver or gold).

And now? Bitcoin offers unprecedented flexibility compared with what has gone before. “Some people in the mid-90s asked: ‘Why do we need the web when we have AOL and CompuServe?'” says Mike Hearn, who works on the programs that underpin Bitcoin. “And so now people ask the same of Bitcoin. The web came to dominate because it was flexible and open, so anyone could take part, innovate and build interesting applications like YouTube, Facebook or Wikipedia, none of which would have ever happened on the AOL platform. I think the same will be true of Bitcoin.”

For a small (but vocal) group in the US, Bitcoin represents the next best alternative to the gold standard, the 19th-century conception that money ought to be backed by precious metals rather than government printing presses and promises. This love of “hard money” is baked into Bitcoin itself, and is the reason why the owners who set computers to do the maths required to make the currency work are known as “miners”, and is why the total supply of Bitcoin is capped.

And for Tyler and Cameron Winklevoss, the twins who sued Mark Zuckerberg (claiming he stole their idea for Facebook; the case was settled out of court), it’s a handy vehicle for speculation. The two of them are setting up the “Winklevoss Bitcoin Trust”, letting conventional investors gamble on the price of the currency.

Some of the hurdles left between Bitcoin and widespread adoption can be fixed. But until and unless Bitcoin develops a fully fledged banking system, some things that we take for granted with conventional money won’t work.

Others are intrinsic to the currency. At some point in the early 22nd century, the last Bitcoin will be generated. Long before that, the creation of new coins will have dropped to near-zero. And through the next 100 or so years, it will follow an economic path laid out by “Nakomoto” in 2009 – a path that rejects the consensus view of modern economics that management by a central bank is beneficial. For some, that means Bitcoin can never achieve ubiquity. “Economies perform better when they have managed monetary policies,” the Bank of England’s chief cashier, Chris Salmon, said at an event to discuss Bitcoin last week. “As a result, it will never be more than an alternative [to state-backed money].” To macroeconomists, Bitcoin isn’t scary because it enables crime, or eases tax dodging. It’s scary because a world where it’s used for all transactions is one where the ability of a central bank to guide the economy is destroyed, by design.

Read the entire article here.

Image courtesy of Google Search.

Send to Kindle

Millionaires are So Yesterday

Not far from London’s beautiful Hampstead Heath lies The Bishops Avenue. From the 1930s until the mid-1970s this mile-long street became the archetypal symbol for new wealth; the nouveau riche millionaires made this the most sought after — and well-known — address for residential property in the nation (of course “old money” still preferred its stately mansions and castles). But since then, The Bishops Avenue has changed, with many properties now in the hands of billionaires, hedge fund investors and oil rich plutocrats.

From the Telegraph:

You can tell when a property is out of your price bracket if the estate agent’s particulars come not on a sheet of A4 but are presented in a 50-page hardback coffee-table book, with a separate section for the staff quarters.

Other giveaway signs, in case you were in any doubt, are the fact the lift is leather-lined, there are 62 internal CCTV cameras, a private cinema, an indoor swimming pool, sauna, steam room, and a series of dressing rooms – “for both summer and winter”, the estate agent informs me – which are larger than many central London flats.

But then any property on The Bishops Avenue in north London is out of most people’s price bracket – such as number 62, otherwise known as Jersey House, which is on the market for £38 million. I am being shown around by Grant Alexson, from Knight Frank estate agents, both of us in our socks to ensure that we do not grubby the miles of carpets or marble floors in the bathrooms (all of which have televisions set into the walls).

My hopes of picking up a knock-down bargain had been raised after the news this week that one property on The Bishops Avenue, Dryades, had been repossessed. The owners, the family of the former Pakistan privatisation minister Waqar Ahmed Khan, were unable to settle a row with their lender, Deutsche Bank.

It is not the only property in the hands of the receivers on this mile-long stretch. One was tied up in a Lehman Brothers property portfolio and remains boarded up. Meanwhile, the Saudi royal family, which bought 10 properties during the First Gulf War as boltholes in case Saddam Hussein invaded, has offloaded the entire package for a reported £80 million in recent weeks. And the most expensive property on the market, Heath Hall, had £35 million knocked off the asking price (taking it down to a mere £65 million).

This has all thrown the spotlight once again on this strange road, which has been nicknamed “Millionaires’ Row” since the 1930s – when a million meant something. Now, it is called “Billionaires’ Row”. It was designed, from its earliest days, to be home to the very wealthy. One of the first inhabitants was George Sainsbury, son of the supermarket founder; another was William Lyle, who used his sugar fortune to build a vast mansion in the Arts and Crafts style. Stars such as Gracie Fields also lived here.

But between the wars, the road became the butt of Music Hall comedians who joked about it being full of “des-reses” for the nouveaux riches such as Billy Butlin. Evelyn Waugh, the master of social nuance, made sure his swaggering newspaper baron Lord Copper of Scoop resided here. It was the 1970s, however, that saw the road vault from being home to millionaires to a pleasure ground for international plutocrats, who used their shipping or oil wealth to snap up properties, knock them down and build monstrous mansions in “Hollywood Tudor” style. Worse were the pastiches of Classical temples, the most notorious of which was built by the Turkish industrialist Halis Toprak, who decided the bath big enough to fit 20 people was not enough of a statement. So he slapped “Toprak Mansion” on the portico (causing locals to dub it “Top Whack Mansion”). It was sold a couple of years ago to the Kazakhstani billionairess Horelma Peramam, who renamed it Royal Mansion.

Perhaps the most famous of recent inhabitants was Lakshmi Mittal, the steel magnate, and for a long time Britain’s richest man. But he sold Summer Palace, for £38 million in 2011 to move to the much grander Kensington Palace Gardens, in the heart of London. The cast list became even more varied with the arrival of Salman Rushdie who hid behind bullet-proof glass and tycoon Asil Nadir, whose address is now HM Belmarsh Prison.

Of course, you can be hard-pressed to discover who owns these properties or how much anyone paid. These are not run-of-the-mill transactions between families moving home. Official Land Registry records reveal a complex web of deals between offshore companies. Miss Peramam holds Royal Mansion in the name of Hartwood Resources Company, registered in the British Virgin Islands, and the records suggest she paid closer to £40 million than the £50 million reported.

Alexson says the complexity of the deals are not just about avoiding stamp duty (which is now at 7 per cent for properties over £2 million). “Discretion first, tax second,” he argues. “Look, some of the Middle Eastern families own £500 billion. Stamp duty is not an issue for them.” Still, new tax rules this year, which increase stamp duty to 15 per cent if the property is bought through an offshore vehicle, have had an effect, according to Alexson, who says that the last five houses he sold have been bought by an individual, not a company.

But there is little sign of these individuals on the road itself. Walking down the main stretch of the Avenue from the beautiful Hampstead Heath to the booming A1, which bisects the road, more than 10 of these 39 houses are either boarded up or in a state of severe disrepair. Behind the high gates and walls, moss and weeds climb over the balustrades. Many others are clearly uninhabited, except for a crew of builders and a security guard. (Barnet council defends all the building work it has sanctioned, with Alexson pointing out that the new developments are invariably rectifying the worst atrocities of the 1980s.)

Read the entire article here.

Image: Toprak Mansion (now known as Royal Mansion), The Bishops Avenue. Courtesy of Daily Mail.

Send to Kindle

The $13,000 College Essay

From the Wall Street Journal:

This spring, with little fanfare, the folks behind the Common Application—the main application form for almost 500 of the nation’s top colleges and universities—announced a big change: the personal statement, the form’s core essay, has been extended from 500 to 650 words long.

I thought: That’ll be $13,000.

Several years ago, on a high floor in a midtown Manhattan office, a father offered me $10,000 to write his son’s personal statement. Apparently he had misunderstood what was meant by “independent college applications adviser.” The publishing industry may be in a tailspin, but in some places, writers can still earn $20 a word. Thanks to the Common Application’s changes (and not including inflation), that’s $13,000 a kid.

Though I had other “day jobs,” for 15 years I worked discreetly as a college-applications adviser in cities from Los Angeles to London. I never wrote a student’s essay, but I was practicing a dark art: such tutoring privileges the elite whose parents can afford it and profits from a miserable process.

The grim statistics of the college admissions race (last year Harvard reported a 5.79% acceptance rate), fueled by an obsession with trophy schools, have warped what might be a powerful threshold for adolescents. At the very moment when teenagers are invited to offer what they’ve learned and who they’ve become, their voices are hijacked by well-meaning adults who think kids can’t possibly be allowed to risk answering these questions on their own.

High-school college counselors tend to nudge kids away from sentiment. Not a bad intention, but an adolescent barred from her feelings is an adolescent paralyzed. Consider the young woman I worked with, who wrote draft after deadening draft about environmental degradation. She didn’t really care about trees, and she had a B in biology. She was an otherwise happy cheerleader who liked history and whose mother had been diagnosed with late-stage breast cancer. Her drafts revealed her feeling that her world was ending, but there was nothing she could do to stop it.

So why not just write the truth?

“No sick relatives,” said her college counselor. “Too manipulative, too obvious.”

We set that aside and started again. She began: “My college counselor told me not to write about my mother’s cancer, but if you want to know anything about me, you have to know what I’m dealing with every day of my life.”

She wrote about her mother’s illness after all, and was accepted most everywhere.

More damned are the students who have been coached to hide their privilege with a wash of community service. It was difficult to find sympathy for the girl whose “most significant activity” was quarterly visits to a local nursing home with her a golden retriever.

What might this 17-year-old have written about? I don’t know. She never revealed what mattered to her, beyond fashion or status. I suspect there might have been a terrific essay about appearances and the cost to individuality of constant evaluation, but I was a tutor, not a therapist.

The strong student was shocked to be accepted nowhere but a distant backup.

A hedge-fund manager rewrote his son’s application. The boy had been rejected early decision by the father’s alma mater. In his revision, the father posited that a community benefits from a range of individuals, the stars and the average people alike; and argued, in the first person, for the boy’s admission by virtue of his mediocrity.

Getting rejected didn’t break this boy’s heart. His father did.

In my years handling applications to elite schools, from Harvard to Haverford, Davidson to Dickinson and everything in between, I was often surprised by where students did gain acceptance. But in every case it was a student who wrote a fabulously independent essay. Not necessarily hyper-sophisticated. But true.

Read the entire article here.

Image courtesy of Google search.

Send to Kindle

Retire at 30

No tricks. No Ponzi scheme. No lottery win. No grand inheritance. It’s rather simple; it’s about simple lifestyle choices made at an early age. We excerpt part of Mister Money Moustache’s fascinating story below.

From the Washington Post:

To hundreds of thousands of devotees, he is Mister Money Mustache. And he is here to tell you that early retirement doesn’t only happen to Powerball winners and those who luck into a big inheritance. He and his wife retired from middle-income jobs before they had their son. Exasperated, as he puts it, by “a barrage of skeptical questions from high-income peers who were still in debt years after we were free from work,” he created a no-nonsense personal finance blog and started spilling his secrets. I was eager to know more. He is Pete (just Pete, for the sake of his family’s privacy). He lives in Longmont, Colo. He is ridiculously happy. And he’s sure his life could be yours. Our conversation was edited for length and clarity..

 

So you retired at 30. How did that happen?

I was probably born with a desire for efficiency — the desire to get the most fun out of any possible situation, with no resources being wasted. This applied to money too, and by age 10, I was ironing my 20 dollar bills and keeping them in a photo album, just because they seemed like such powerful and intriguing little rectangles.

But I didn’t start saving and investing particularly early, I just maintained this desire not to waste anything. So I got through my engineering degree debt-free — by working a lot and not owning a car — and worked pretty hard early on to move up a bit in the career, relocating from Canada to the United States, attracted by the higher salaries and lower cost of living.

Then my future wife and I moved in together and DIY-renovated a junky house into a nice one, kept old cars while our friends drove fancy ones, biked to work instead of driving, cooked at home and went out to restaurants less, and it all just added up to saving more than half of what we earned. We invested this surplus as we went, never inflating our already-luxurious lives, and eventually the passive income from stock dividends and a rental house was more than enough to pay for our needs (about $25,000 per year for our family of three, with a paid-off house and no other debt).

What sort of retirement income do you have?

Our bread-and-butter living expenses are paid for by a single rental house we own, which generates about $25,000 per year after expenses. We also have stock index funds and 401(k) plans, which could boost that by about 50 percent without depleting principal if we ever needed it, but, so far, we can’t seem to spend more than $25,000 no matter how much we let loose. So the dividends just keep reinvesting.

You describe the typical middle-class life as an “exploding volcano of wastefulness.” Seems like lots of personal finance folks obsess about lattes. Are you just talking about the lattes here?

The latte is just the foamy figurehead of an entire spectrum of sloppy “I deserve it” luxury spending that consumes most of our gross domestic product these days. Among my favorite targets: commuting to an office job in an F-150 pickup truck, anything involving a drive-through, paying $100 per month for the privilege of wasting four hours a night watching cable TV and the whole yoga industry. There are better, and free, ways to meet these needs, but everyone always chooses the expensive ones and then complains that life is hard these days.

Read the entire article following the jump or visit Mr. Money Moustache’s blog.

Image courtesy of Google Search.

Send to Kindle

Art Basel: Cheese Expo, Pool Party or Art Show?

Simon Coonan over a Slate posits a simple question:

“How did the art world become such a vapid hell-hole of investment-crazed pretentiousness?”

In his scathing attack on the contemporary art scene replete with Twitter feeds, pool parties, and gallery-curated designer cheese, Coonan quite rightly asks why window dressing and marketing have replaced artistry and craftsmanship. And, more importantly, has big money replaced great, new art?

As an example, the biggest news from Art Basel, the biggest art show in the United States, is not art at all. Celebrity contemporary artist Jeff Koons’ has defected to a rival gallery from his previous home with Larry Gagosian. Gagosian to the art cognoscenti is the “world’s most powerful art dealer”.

From Slate:

Freud said the goals of the artist are fame, money, and beautiful lovers. Based on my artist acquaintances, I would say this holds true today. What have changed, however, are the goals of the art itself. Do any exist?

How did the art world become such a vapid hell-hole of investment-crazed pretentiousness? How did it become, as Camille Paglia has recently described it, a place where “too many artists have lost touch with the general audience and have retreated to an airless echo chamber”? (More from her in a moment.)

There are sundry problems bedeviling the contemporary art scene. Here are eight that spring readily to mind:

1. Art Basel Miami.

It’s baaa-ack, and I, for one, will not be attending. The overblown art fair in Miami—an offshoot of the original, held in Basel, Switzerland—has become a promo-party cheese-fest. All that craven socializing and trendy posing epitomize the worst aspects of today’s scene, provoking in me a strong desire to start a Thomas Kinkade collection. Whenever some hapless individual innocently asks me if I will be attending Art Basel—even though the shenanigans don’t start for another two weeks, I am already getting e-vites for pre-Basel parties—I invariably respond in Tourette’s mode:

“No. In fact, I would rather jump in a river of boiling snot, which is ironic since that could very well be the title of a faux-conceptual installation one might expect to see at Art Basel. Have you seen Svetlana’s new piece? It’s a river of boiling snot. No, I’m not kidding. And, guess what, Charles Saatchi wants to buy it and is duking it out with some Russian One Percent-er.”

2. Blood, poo, sacrilege, and porn.

Old-school ’70s punk shock tactics are so widespread in today’s art world that they have lost any resonance. As a result, twee paintings like Gainsborough’s Blue Boy and Constable’s Hay Wain now appear mesmerizing, mysterious, and wildly transgressive. And, as Camille Paglia brilliantly argues in her must-read new book, Glittering Images, this torrent of penises, elephant dung, and smut has not served the broader interests of art. By providing fuel for the Rush Limbaugh-ish prejudice that the art world is full of people who are shoving yams up their bums and doing horrid things to the Virgin Mary, art has, quoting Camille again, “allowed itself to be defined in the public eye as an arrogant, insular fraternity with frivolous tastes and debased standards.” As a result, the funding of school and civic arts programs has screeched to a halt and “American schoolchildren are paying the price for the art world’s delusional sense of entitlement.” Thanks a bunch, Karen Finley, Chris Ofili, Andres Serrano, Damien Hirst, and the rest of you naughty pranksters!

Any taxpayers not yet fully aware of the level of frivolity and debasement to which art has plummeted need look no further than the Museum of Modern Art, which recently hosted a jumbo garage-sale-cum-performance piece created by one Martha Rosler titled “Meta-Monumental Garage Sale.” Maybe this has some reverse-chic novelty for chi-chi arty insiders, but for the rest of us out here in the real world, a garage sale is just a garage sale.

8. Cool is corrosive.

The dorky uncool ’80s was a great time for art. The Harings, Cutrones, Scharfs, and Basquiats—life-enhancing, graffiti-inspired painters—communicated a simple, relevant, populist message of hope and flava during the darkest years of the AIDS crisis. Then, in the early ‘90s, grunge arrived, and displaced the unpretentious communicative culture of the ‘80s with the dour obscurantism of COOL. Simple fun and emotional sincerity were now seen as embarrassing and deeply uncool. Enter artists like Rachel barrel-of-laughs Whiteread, who makes casts of the insides of cardboard boxes. (Nice work if you can get it!)

A couple of decades on, art has become completely pickled in the vinegar of COOL, and that is why it is so irrelevant to the general population.

Read the entire article following the jump.

Image: Untitled acrylic and mixed media on canvas by Jean-Michel Basquiat, 1984. Courtesy of Wikipedia.

Send to Kindle

Is It Good That Money Can Buy (Almost) Anything?

Money is a curious invention. It enables efficient and almost frictionless commerce and it allows us to assign tangible value to our time. Yet it poses enormous societal challenges and ethical dilemmas. For instance, should we bribe our children with money in return for better grades? Should we allow a chronically ill kidney patient to purchase a replacement organ from a donor?

Raghuram Rajan, professor of finance at the University of Chicago, reviews a fascinating new book that attempts to answer some of these questions. The book, “What Money Can’t Buy: The Moral Limits of the Market” is written by noted Harvard philosopher Michael Sandel.

From Project Syndicate:

In an interesting recent book, What Money Can’t Buy: The Moral Limits of the Market, the Harvard philosopher Michael Sandel points to the range of things that money can buy in modern societies and gently tries to stoke our outrage at the market’s growing dominance. Is he right that we should be alarmed?

While Sandel worries about the corrupting nature of some monetized transactions (do kids really develop a love of reading if they are bribed to read books?), he is also concerned about unequal access to money, which makes trades using money inherently unequal. More generally, he fears that the expansion of anonymous monetary exchange erodes social cohesion, and argues for reducing money’s role in society.

Sandel’s concerns are not entirely new, but his examples are worth reflecting upon. In the United States, some companies pay the unemployed to stand in line for free public tickets to congressional hearings. They then sell the tickets to lobbyists and corporate lawyers who have a business interest in the hearing but are too busy to stand in line.

Clearly, public hearings are an important element of participatory democracy. All citizens should have equal access. So selling access seems to be a perversion of democratic principles.

The fundamental problem, though, is scarcity. We cannot accommodate everyone in the room who might have an interest in a particularly important hearing. So we have to “sell” entry. We can either allow people to use their time (standing in line) to bid for seats, or we can auction seats for money. The former seems fairer, because all citizens seemingly start with equal endowments of time. But is a single mother with a high-pressure job and three young children as equally endowed with spare time as a student on summer vacation? And is society better off if she, the chief legal counsel for a large corporation, spends much of her time standing in line?

Whether it is better to sell entry tickets for time or for money thus depends on what we hope to achieve. If we want to increase society’s productive efficiency, people’s willingness to pay with money is a reasonable indicator of how much they will gain if they have access to the hearing. Auctioning seats for money makes sense – the lawyer contributes more to society by preparing briefs than by standing in line.

On the other hand, if it is important that young, impressionable citizens see how their democracy works, and that we build social solidarity by making corporate executives stand in line with jobless teenagers, it makes sense to force people to bid with their time and to make entry tickets non-transferable. But if we think that both objectives – efficiency and solidarity – should play some role, perhaps we should turn a blind eye to hiring the unemployed to stand in line in lieu of busy lawyers, so long as they do not corner all of the seats.

What about the sale of human organs, another example Sandel worries about? Something seems wrong when a lung or a kidney is sold for money. Yet we celebrate the kindness of a stranger who donates a kidney to a young child. So, clearly, it is not the transfer of the organ that outrages us – we do not think that the donor is misinformed about the value of a kidney or is being fooled into parting with it. Nor, I think, do we have concerns about the scruples of the person selling the organ – after all, they are parting irreversibly with something that is dear to them for a price that few of us would accept.

I think part of our discomfort has to do with the circumstances in which the transaction takes place. What kind of society do we live in if people have to sell their organs to survive?

Read the entire article after the jump.

Image courtesy of Google.

Send to Kindle

I Scream, You Scream, We Should All Scream for The Scream

On May 2, 2012 The Scream sold at auction in New York for just under $120,000,000.

The Scream, actually one of 4 slightly different originals, painted by Edvard Munch, has become as iconic as the Apple or McDonalds corporate logo. And, that sums up the crass, financial madness that continues to envelop the art world, and indeed most of society.

More from Jonathan Jones on Art:

I used to like The Scream. Its sky of blood and zombie despair seemed to say so much, so honestly. Munch is a poet in colours. His pictures portray moods, most of which are dark. But sometimes on a spring day on the banks of Oslofjord he can muster a bit of uneasy delight in the world. Right now, I would rather look at his painting Ashes, a portrayal of the aftermath of sex in a Norwegian wood, or Girls on a Pier, whose lyrical longing is fraught with loneliness, than at Munch’s most famous epitome of the modern condition.

The modern art market is becoming violent and destructive. It spoils what it sells and leaves nothing but ashes. The greatest works of art are churned through a sausage mill of celebrity and chatter and become, at the end of it all, just a price tag. The Scream has been too famous for too long: too famous for its own good. Its apotheosis by this auction of the only version in private hands turns the introspection of a man in the grip of terrible visions into a number: 120,000,000. Dollars, that is. It is no longer a great painting: it is an event in the madness of our time. As all the world screams at inequality and the tyranny of a finance-led model of capitalism that is failing to provide the general wellbeing that might justify its excesses, the 1% rub salt in the wound by turning profound insights into saleable playthings.

Disgust rises at the thought of that grotesque number, so gross and absurd that it destroys actual value. Art has become the meaningless totem of a world that no longer feels the emotions it was created to express. We can no longer create art like The Scream (the closest we can get is a diamond skull). But we are good at turning the profundities of the past into price tags.

Think about it. Munch’s Scream is an unadulterated vision of modern life as a shudder of despair. Pain vibrates across the entire surface of the painting like a pool of tears rippled by a cry. Munch’s world of poverty and illness, as Sue Prideaux makes clear in her devastating biography, more than justified such a scream. His other paintings, such as The Sick Child and Evening on Karl-Johan reveal his comprehensive unhappiness and alienation that reaches its purest lucidity in The Scream.

Read the entire article after the jump.

Image: One of several versions of the painting “The Scream”. Painted in 1893, Edvard Munch. Courtesy of The National Gallery, Oslo, Norway.

Send to Kindle

Religious Art: From Faith or For Money?

Over the centuries many notable artists have painted religious scenes initiated or influenced by a very deep religious conviction; some painted to give voice to their own spirituality, others to mirror the faith of their time and community. However, others simply painted for fame or fortune, or both, or to remain in good stead with their wealthy patrons and landlords.

This bring us to another thoughtful article from Jonathan Jones over at the Guardian.

From the Guardian:

“To paint the things of Christ you must live with Christ,” said the 15th-century artist Fra Angelico. He knew what he was talking about – he was a Dominican monk of such exemplary virtue that in 1982 he was officially beatified by Pope John Paul II. He was also a truly great religious artist whose frescoes at San Marco in Florence have influenced modern artists such as Mark Rothko. But is all holy art that holy?

From the dark ages to the end of the 17th century, the vast majority of artistic commissions in Europe were religious. Around 1700 this somehow stopped, at least when it came to art anyone cares to look at now. The great artists of the 18th century, and since, worked for secular patrons and markets. But in all those centuries when Christianity defined art, its genres, its settings, its content, was every painter and sculptor totally sincerely faithful in every work of art? Or were some of them just doing what they had to do and finding pleasure in the craft?

This question relates to another. What is it like to live in a world where everyone is religious? It is often said it was impossible to even imagine atheism in the middle ages and the Renaissance. This is so different from modern times that people do not even try to imagine it. Modern Christians blithely imagine a connection when actually a universal church meant a mentality so different from modern “faith” that today’s believers are as remote from it as today’s non-believers. Among other things it meant that while some artists “lived with Christ” and made art that searched their souls, others enjoyed the colours, the drama, the rich effects of religious paintings without thinking too deeply about the meaning.

Here are two contrasting examples from the National Gallery. Zurbarán’s painting of St Francis in Meditation (1635-9) is a harrowing and profoundly spiritual work. The face of a kneeling friar is barely glimpsed in a darkness that speaks of inner searching, of the long night of the soul. This is a true Christian masterpiece. But compare it to Carlo Crivelli’s painting The Annunciation (1486) in the same museum. Crivelli’s picture is a feast for the eye. Potted plants, a peacock, elaborately decorated classical buildings – and is that a gherkin just added in at the front of the scene? – add up to a materialistic cornucopia of visual interest. What is the religious function of such detail? Art historians, who sometimes seem to be high on piety, will point to the allegorical meaning of everyday objects in Renaissance art. But that’s all nonsense. I am not saying the allegories do not exist – I am saying they do not matter much to the artist, his original audience or us. In reality, Crivelli is enjoying himself, enjoying the world, and he paints religious scenes because that’s what he got paid to paint.

By smothering the art of the past in a piety that in some cases may be woefully misplaced, its guardians do it a disservice. Is Crivelli a Christian artist? Not in any sense that is meaningful today. He loves the things of this life, not the next.

Read the entire article after the jump.

Annunciation with St Emidius, Crivelli Carlo, 1486. National Gallery, London. Courtesy of Wikipedia / National Gallery.

Send to Kindle

On Being a Billionare For a Day

New York Times writer Kevin Roose recently lived the life of a billionaire for a day. His report while masquerading as a member of the 0.01 percent of the 0.1 percent of the 1 percent makes for fascinating and disturbing reading.

From the New York Times:

I HAVE a major problem: I just glanced at my $45,000 Chopard watch, and it’s telling me that my Rolls-Royce may not make it to the airport in time for my private jet flight.

Yes, I know my predicament doesn’t register high on the urgency scale. It’s not exactly up there with malaria outbreaks in the Congo or street riots in Athens. But it’s a serious issue, because my assignment today revolves around that plane ride.

“Step on it, Mike,” I instruct my chauffeur, who nods and guides the $350,000 car into the left lane of the West Side Highway.

Let me back up a bit. As a reporter who writes about Wall Street, I spend a fair amount of time around extreme wealth. But my face is often pressed up against the gilded window. I’ve never eaten at Per Se, or gone boating on the French Riviera. I live in a pint-size Brooklyn apartment, rarely take cabs and feel like sending Time Warner to The Hague every time my cable bill arrives.

But for the next 24 hours, my goal is to live like a billionaire. I want to experience a brief taste of luxury — the chauffeured cars, the private planes, the V.I.P. access and endless privilege — and then go back to my normal life.

The experiment illuminates a paradox. In the era of the Occupy Wall Street movement, when the global financial elite has been accused of immoral and injurious conduct, we are still obsessed with the lives of the ultrarich. We watch them on television shows, follow their exploits in magazines and parse their books and public addresses for advice. In addition to the long-running list by Forbes, Bloomberg now maintains a list of billionaires with rankings that update every day.

Really, I wondered, what’s so great about billionaires? What privileges and perks do a billion dollars confer? And could I tap into the psyches of the ultrawealthy by walking a mile in their Ferragamo loafers?

At 6 a.m., Mike, a chauffeur with Flyte Tyme Worldwide, picked me up at my apartment. He opened the Rolls-Royce’s doors to reveal a spotless white interior, with lamb’s wool floor mats, seatback TVs and a football field’s worth of legroom. The car, like the watch, was lent to me by the manufacturer for the day while The New York Times made payments toward the other services.

Mike took me to my first appointment, a power breakfast at the Core club in Midtown. “Core,” as the cognoscenti call it, is a members-only enclave with hefty dues — $15,000 annually, plus a $50,000 initiation fee — and a membership roll that includes brand-name financiers like Stephen A. Schwarzman of the Blackstone Group and Daniel S. Loeb of Third Point.

Over a spinach omelet, Jennie Enterprise, the club’s founder, told me about the virtues of having a cloistered place for “ultrahigh net worth individuals” to congregate away from the bustle of the boardroom.

“They want someplace that respects their privacy,” she said. “They want a place that they can seamlessly transition from work to play, that optimizes their time.”

After breakfast, I rush back to the car for a high-speed trip to Teterboro Airport in New Jersey, where I’m meeting a real-life billionaire for a trip on his private jet. The billionaire, a hedge fund manager, was scheduled to go down to Georgia and offered to let me interview him during the two-hour jaunt on the condition that I not reveal his identity.

Read the entire article after the Learjet.

Image: Waited On: Mr. Roose exits the Rolls-Royce looking not unlike many movers and shakers in Manhattan. Courtesy of New York Times.

Send to Kindle

Self-Esteem and Designer Goods

From Scientific American:

Sellers have long charged a premium for objects that confer some kind of social status, even if they offer few, if any, functional benefits over cheaper products. Designer sunglasses, $200,000 Swiss watches, and many high-end cars often seem to fall into this category. If a marketer can make a mundane item seem like a status symbol—maybe by wrapping it in a fancy package or associating it with wealth, success or beauty—they can charge more for it.

Although this practice may seem like a way to trick consumers out of their hard-earned cash, studies show that people do reap real psychological benefits from the purchase of high status items. Still, some people may gain more than others do, and studies also suggest that buying fancy stuff for yourself is unlikely to be the best way to boost your happiness or self-esteem.

In 2008, two research teams demonstrated that people process social values in the brain’s reward center: the striatum, which also responds to monetary gains. That these two values share a cerebral home suggests we may weigh our reputation in cash terms. Whether we like it or not, attaching a monetary value to social status makes good scientific sense.

Much of what revs up this reward center—food and recreational drugs, for example—is associated with a temporary rush of pleasure or good feeling, rather than long-lasting satisfaction. But when we literally pay for that good feeling, by buying a high-status car or watch, say, the effect may last long enough to unleash profitable behaviors. In a study published last year, researchers at National Sun Yat-Sen University in Taiwan found that the mere use of brand name products seemed to make people feel they deserved higher salaries, in one case, and in the other, would be more attractive to a potential date, reports Roger Dooley in his Neuromarketing blog. Thus, even if the boost of good feeling—and self-worth—is short-lived, it might spawn actions that yield lasting benefits.

Other data suggest that owning fancy things might have more direct psychological benefits. In a study published in 2010, psychologist Ed Deiner at the University of Illinois and his colleagues found that standard of living, as measured by household income and ownership of luxury goods, predicted a person’s overall satisfaction with life—although it did not seem to enhance positive emotions.  That rush of pleasure you get from the purchase probably does fade, but a type of self-esteem effect seems to last.

Read the entire article here.

Image of luxury goods. Courtesy of Google search.

Send to Kindle

Stephen Colbert: Seriously Funny

A fascinating article of Stephen Colbert, a funny man with some serious jokes about our broken political process.

From the New York Times magazine:

There used to be just two Stephen Colberts, and they were hard enough to distinguish. The main difference was that one thought the other was an idiot. The idiot Colbert was the one who made a nice paycheck by appearing four times a week on “The Colbert Report” (pronounced in the French fashion, with both t’s silent), the extremely popular fake news show on Comedy Central. The other Colbert, the non-idiot, was the 47-year-old South Carolinian, a practicing Catholic, who lives with his wife and three children in suburban Montclair, N.J., where, according to one of his neighbors, he is “extremely normal.” One of the pleasures of attending a live taping of “The Colbert Report” is watching this Colbert transform himself into a Republican superhero.

Suburban Colbert comes out dressed in the other Colbert’s guise — dark two-button suit, tasteful Brooks Brothersy tie, rimless Rumsfeldian glasses — and answers questions from the audience for a few minutes. (The questions are usually about things like Colbert’s favorite sport or favorite character from “The Lord of the Rings,” but on one memorable occasion a young black boy asked him, “Are you my father?” Colbert hesitated a moment and then said, “Kareem?”) Then he steps onstage, gets a last dab of makeup while someone sprays his hair into an unmussable Romney-like helmet, and turns himself into his alter ego. His body straightens, as if jolted by a shock. A self-satisfied smile creeps across his mouth, and a manically fatuous gleam steals into his eyes.

Lately, though, there has emerged a third Colbert. This one is a version of the TV-show Colbert, except he doesn’t exist just on screen anymore. He exists in the real world and has begun to meddle in it. In 2008, the old Colbert briefly ran for president, entering the Democratic primary in his native state of South Carolina. (He hadn’t really switched parties, but the filing fee for the Republican primary was too expensive.) In 2010, invited by Representative Zoe Lofgren, he testified before Congress about the problem of illegal-immigrant farmworkers and remarked that “the obvious answer is for all of us to stop eating fruits and vegetables.”

But those forays into public life were spoofs, more or less. The new Colbert has crossed the line that separates a TV stunt from reality and a parody from what is being parodied. In June, after petitioning the Federal Election Commission, he started his own super PAC — a real one, with real money. He has run TV ads, endorsed (sort of) the presidential candidacy of Buddy Roemer, the former governor of Louisiana, and almost succeeded in hijacking and renaming the Republican primary in South Carolina. “Basically, the F.E.C. gave me the license to create a killer robot,” Colbert said to me in October, and there are times now when the robot seems to be running the television show instead of the other way around.

“It’s bizarre,” remarked an admiring Jon Stewart, whose own program, “The Daily Show,” immediately precedes “The Colbert Report” on Comedy Central and is where the Colbert character got his start. “Here is this fictional character who is now suddenly interacting in the real world. It’s so far up its own rear end,” he said, or words to that effect, “that you don’t know what to do except get high and sit in a room with a black light and a poster.”

Read the entire article here.

Images courtesy of Google search.

Send to Kindle

Levelling the Political Playing Field

Let’s face it, taking money out of politics in the United States, especially since the 2010 Supreme Court Decision (Citizens United v. Federal Election Commission), is akin to asking a hardcore addict to give up his or her favorite substance — it’s unlikely to be easy, if at all possible.

So, another approach might be to “re-distribute” the funds more equitably. Not a new idea — a number of European nations do this today. However, Max Frankel over at the NY Review of Books offers a thoughtful proposal with a new twist.

By Max Frankel:

Every election year brings vivid reminders of how money distorts our politics, poisons our lawmaking, and inevitably widens the gulf between those who can afford to buy influence and the vast majority of Americans who cannot. In 2012, this gulf will become a chasm: one analysis predicts that campaign spending on presidential, congressional, and state elections may exceed $6 billion and all previous records. The Supreme Court has held that money is in effect speech, it talks; and those without big money have become progressively voiceless.

That it may cost as much as a billion dollars to run for President is scandal enough, but the multimillions it now takes to pursue or defend a seat in Congress are even more corrupting. Many of our legislators spend hours of every day begging for contributions from wealthy constituents and from the lobbyists for corporate interests. The access and influence that they routinely sell give the moneyed a seat at the tables where laws are written, to the benefit of those contributors and often to the disadvantage of the rest of us.

And why do the candidates need all that money? Because electoral success requires them to buy endless hours of expensive television time for commercials that advertise their virtues and, more often, roundly assail their opponents with often spurious claims. Of the more than a billion dollars spent on political commercials this year, probably more than half will go for attack ads.

It has long been obvious that television ads dominate electioneering in America. Most of those thirty-second ads are glib at best but much of the time they are unfair smears of the opposition. And we all know that those sordid slanders work—the more negative the better—unless they are instantly answered with equally facile and equally expensive rebuttals.

Other election expenses pale beside the ever larger TV budgets. Campaign staffs, phone and email solicitations, billboards and buttons and such could easily be financed with the small contributions of ordinary voters. But the decisive TV competitions leave politicians at the mercy of self-interested wealthy individuals, corporations, unions, and groups, now often disguised in “Super PACs” that can spend freely on any candidate so long as they are not overtly coordinating with that candidate’s campaign. Even incumbents who face no immediate threat feel a need to keep hoarding huge war chests with which to discourage potential challengers. Senator Charles Schumer of New York, for example, was easily reelected to a third term in 2010 but stands poised five years before his next run with a rapidly growing fund of $10 million.

A rational people looking for fairness in their politics would have long ago demanded that television time be made available at no cost and apportioned equally among rival candidates. But no one expects that any such arrangement is now possible. Political ads are jealously guarded as a major source of income by television stations. And what passes for news on most TV channels gives short shrift to most political campaigns except perhaps to “cover” the advertising combat.

As a political reporter and editor, I concluded long ago that efforts to limit campaign contributions and expenditures have been either disingenuous or futile. Most spending caps are too porous. In fact, they have further distorted campaigns by favoring wealthy candidates whose spending on their own behalf the Supreme Court has exempted from all limitations. And the public has overwhelmingly rejected the use of tax money to subsidize campaigning. In any case, private money that wants to buy political influence tends to behave like water running downhill: it will find a way around most obstacles. Since the court’s decision in the 2010 Citizens United case, big money is now able to find endless new paths, channeling even tax-exempt funds into political pools.

There are no easy ways to repair our entire election system. But I believe that a large degree of fairness could be restored to our campaigns if we level the TV playing field. And given the television industry’s huge stake in paid political advertising, it (and the Supreme Court) would surely resist limiting campaign ads, as many European countries do. With so much campaign cash floating around, there is only one attractive remedy I know of: double the price of political commercials so that every candidate’s purchase of TV time automatically pays for a comparable slot awarded to an opponent. The more you spend, the more your rival benefits as well. The more you attack, the more you underwrite the opponent’s responses. The desirable result would likely be that rival candidates would negotiate an arms control agreement, setting their own limits on their TV budgets and maybe even on their rhetoric.

Read the entire article here.

Image courtesy of Alliance for a Just Society.

Send to Kindle