April Book Lust: Special Travel Edition

Country Driving

by Peter Hessler, reviewed by Paul Denlinger

Paul Denlinger

Country Driving, like China, is one of those books which operates on several different levels all at the same time. For those who are not acquainted with China, it is light entertainment about the country’s rapid development, and some of the entertaining, even comic, results and side-effects of that development. For those who are more acquainted with the country, it offers a deeper look at the regional and cultural differences within this fascinating country, and how the country operates, even though the country is as different from region to region as the European continent.

During the period from 2001 – 2007, the author, who is a journalist and is fluent in Chinese, took three different road trips. So different and contrasting are they that he divides the book into three different parts: Book I called The Wall, Book II called The Village and Book III called The Factory.  Book I’s title refers to the Great Wall, which he followed into the provinces of Shaanxi, Gansu and Xinjiang in China’s arid northwest.  Book II refers to a village which he visited and stayed in not far from Beijing in distance, but lives in a completely different world culturally.  Book III refers to factory life in southern Zhejiang province, which is now the most light-industrialized part of China, full of family-owned factories and businesses.

The author’s fluency in Chinese brings the reader much closer to the experience of the Chinese as the Chinese see themselves. For the most part, journalists in China are not fluent in Chinese, and rely on local assistants to translate for them. Until recently, these assistants were assigned to them by the Chinese government, and it was up to them to insure that the western journalists insured the right official perception of China. For Peter Hessler, these human filters don’t exist, giving the book a much more human feel.

This gives the reader the ability to see how the Chinese see their own modernization and put it in perspective. While they are materially much better off, with the income of the village going up more than 100% in six years, life is still tough.  Even in a small village, there is still politics because they need to elect a village party secretary to run its own day to day affairs.

In contrast to this, life in The Factory section is different. There is less government interference, and when it happens, it happens in a different way, mainly having to do with how rural land is turned into urban or industrial land. For those in business or from a business background, this is particularly interesting: it explains how money and wealth are created from land use. In much of the western press, this is dismissed as corruption, but Hessler subtly explains that there is much more to it than that. The Factory also does much to explain how whole families have moved from one province to another, attempting to establish new relationships along the way and make their way up the economic success ladder in today’s China. In short, it’s all about leverage, something which the Chinese have had a few thousand years to learn about. In the race for leverage, whole towns have chosen to find niches, just making buttons, belts or socks. The Factory refers to a factory which makes support wires for women’s brassieres, and how one enterprising engineer, copied one European machine, then made Chinese copies, just as Francis Cabot Lowell copied loom designs from the British in 19th century America.  In another case, a whole village of young men became gold farmers, playing World of Warcraft for players in Germany, but then abandoning that for something else when the rules changed. In yet another story, Hessler interviews a woman painter who paints street scenes of Venice and life in rural Utah, even though she has never been outside China. Unlike painters in the west, she takes a very practical view of her work; she reveals that she doesn’t like painting, that most of her buyers have poor taste, but that it pays the bills and she is pleased with that.

For someone who is new to China, the book provides a gentle introduction and good entertainment. For those who are more acquainted with the country, it provides another look at a different part or parts of China, and reminds us that the country is so vast and different that it’s too much for any single individual to take in.

Paul Denlinger is an internet consultant based in Beijing and Hong Kong who writes for Forbes, his own blog, the China Vortex,  and Asian Correspondent.

Harry Truman’s Excellent Adventure

by Matthew Algeo, reviewed by Christopher Buckley in The Washington Post:

The title “Excellent Adventure” probably ought to be retired at this point, but not quite yet, for Matthew Algeo has given us just that: an extremely excellent adventure by ex-President Harry Truman and his wife, Bess, in the form of a road trip they both made — just the two of them — in the summer of 1953, not long after Harry had left the White House with a 22 percent approval rating. Twenty-two percent . . . why does that sound familiar? (Confidential memo to George W: Pack up that car with Laura and hit the road!)

It’s hard not to read this utterly likable if occasionally overwrought book without feeling a tad nostalgic for the days when American automobiles set the gold standard, gas cost 27 cents a gallon, and the best restaurant in town might be found at the airport. It may make you feel a bit ironic, too, inasmuch as the impetus for the Truman escapade was a trip to Philadelphia, where the former president delivered a speech deploring Republican cuts to the defense budget.

At times, you feel as though you’ve wandered into an episode of “The Twilight Zone.” Harry Truman, perhaps the most down-to-earth man who ever led this country, returned home to Independence, Mo., in 1953, broke. His only source of income was his $111.96-per-month World War I pension. In those days, ex-presidents didn’t get pensions. But they might be offered a free car, and Harry happily accepted a spanking-new 1953 Chrysler (those were the days) New Yorker. The sticker price then was about $4,000, the average yearly salary of an American worker. It was offered gratis, but Truman insisted on paying something — and probably spent a whole dollar on it. A very presidential compromise.

Harry had always been a car man, and now he had the best. And so, broke, out of work, he did what any red-blooded American would do under similar circumstances: He hit the road and took along the missus to make sure he didn’t speed (a Truman tendency). And what an adventure they had. He got pulled over on the Pennsylvania Turnpike — despite Bess’s supervision — stayed in motels, ate in diners. Everyone delighted in seeing the former First Couple, never mind the 22 percent approval rating. The country just loved Harry. When they reached Washington, the accommodations improved (the Mayflower). In New York City, they stayed at the Waldorf=Astoria (note the equal sign, duly explained by the diligent Algeo), where Harry pointedly did not look up his old friend and erstwhile adversary, Herbert Hoover. Cole Porter was also living there at the time. One of the delights of the book is the incidental detail: Porter and Secretary of State Dean Acheson had been roommates at Harvard Law School. Who knew? There’s enough of that in here to make you a Trivial Pursuit god for a year. In Philadelphia, Harry spoke to retired military officers in the same hotel where, years later, Legionnaire’s Disease struck. Indeed, a weird hotel karma seemed to follow Harry and Bess: In Wheeling, W. Va., they stayed at the McClure House, the birthplace of McCarthyism. It was there that Tail Gunner Joe delivered the immortal line “I have here in my hand a list . . . .” A Decatur, Ill., motel where the Trumans lodged is now a correctional facility.

In Ohio, the couple passed near enough to Wright-Patterson Air Force Base for Algeo, a public radio reporter, to descant informatively and amusingly over the history of presidential airplanes. Harry was the first president to fly domestically, he reports. Franklin Roosevelt’s plane was nicknamed the Sacred Cow. Harry called his second plane the Independence. When he was flying over Ohio, home state of his nemesis, Republican Sen. Robert Taft, Harry would go aft to flush the lavatory in a symbolic gesture of non-partisanship. Presidential aircraft didn’t become Air Force One until Eisenhower’s time. Ike’s plane, the Columbine II, took its name from the flower of Mamie Eisenhower’s home state, Colorado. (It now sadly connotes something else.) Back then Ike’s plane was also known as Air Force 8610. One day, there was a bit of confusion in air traffic control over it and Eastern Airlines flight 8610, prompting a new protocol of clarity in nomenclature. All this is, to be sure, an America that no longer exists.

The thought of an ex-president jumping into a car with just his wife, no Secret Service, packing his own bags, pumping his own gas, drinking Cokes with grease monkeys is . . . well, it ain’t gonna happen, and we’re the poorer nation for that. Perhaps this is why our current president’s spontaneous evening strolls with his wife and their romantic dinners in Prague are so charming: They recall us to a time when we were sort of — gosh — normal. The annual pension of an ex-president today is about $190,000, plus expenses that can bring the tab as high as $2.5 million. Gerald Ford, bless his Republican heart, turned the ex-presidency into a branding opportunity, and, together, the Clintons earned $109 million from eight years of speeches and corporate appearances. All of which proves, one might say, that it is still a great country, but very different from the days of Harry and Bess and their 1953 Chrysler.

Lincoln Highway

by Michael Wallis, review by Publishers Weekly:

One look at the retro artwork on the cover of this travel tome will tell you what’s in store for you—a visit down memory lane the length of the U.S. Following the 3,000-mile Lincoln Highway—much of it has been replaced or renamed—from New York City’s Times Square to San Francisco Bay, Wallis (Route 66: The Mother Road ) expertly captures the oft-forgotten and offbeat sights and tales of an America bypassed by superhighways. Most every town, restaurant, mom-and-pop store the author encounters along “The Main Street Across America” has seen better days, but Wallis still takes the time to celebrate their classic architecture and down-home recipes. With an eye for details and a gift for storytelling, he moves just as smoothly between the role of tour guide and yarn spinner as he does between the road’s history and its current incarnation. The juxtaposition between old and new is further underlined by the presentation of classic images and new photographs by Williamson. With a chapter dedicated to each of the 13 states that the highway passes through, this book will delight those looking to uncover their local roots as well as adventurers yearning for that American rite of passage—a cross-country road trip.

Listen to an interview with the author and photographer.

The Cactus Eaters: How I Lost My Mind and Almost Found Myself on the Pacific Crest Trail

by Dan White, reviewed by Publishers Weekly

Traversing broiling deserts, snowy mountain passes and dank rain forests on its crooked way from Mexico to Canada, the Pacific Coast Trail is an epic challenge for die-hard backpackers. White and his girlfriend, Melissa, set out, late in the season and bereft of experience, to tread all 2,650 miles of it, leaving behind lousy reporting jobs and hoping to find self-definition and a deepened relationship. (They call their trek the Lois and Clark Expedition.) Hilarious greenhorn misadventures ensue—including the author’s ill-advised chomp, while dizzy with dehydration, into a reputedly moisture-laden prickly-pear cactus—that tested their survival skills and commitment as a couple. The trail becomes less an itinerary than a world unto itself, full of squalor, discomfort and majestic scenery, and peopled by charismatic misfits and an austere cult of ultra-light speed-hikers, as the couple rely on arcane camping gear and bizarre gummy-bear-and-marshmallow diets. The wilderness authenticity the author seeks proves elusive; all journey and no destination, the story itself eventually trails off with the hero even more callow and confused than when he started. Still, White’s vivid prose and hangdog humor make readers want to keep up.

Gotta Watchit

PBS is airing a great series called Mind Over Money.

In the aftermath of the worst financial crisis since the Great Depression, NOVA presents “Mind Over Money”—an entertaining and penetrating exploration of why mainstream economists failed to predict the crash of 2008 and why we so often make irrational financial decisions. It’s a program that reveals how our emotions interfere with our decision-making and explores controversial new arguments about the world of finance. Before the current crash, most Wall Street analysts believed that markets are “efficient”—that investors are reasonable and always operate in their own economic self-interest. Most of the time, these assumptions of classical economics work well enough. But in extreme situations, people panic and conventional theories collapse. In the face of the recent crash, can a new science that aims to incorporate human psychology into finance—behavioral economics—do better?

I’m looking forward to seeing the experiment where they wire traders’ brains and bodies during trading sessions. Behavioral economics is a favorite interest of mine, hence Tradeoffs: Leveraging the Longs & Shorts of Life. Dan Ariely wrote a great book on the subject, Predictably Irrational. I highly recommend it.

Announcing Tradeoffs: The Road Trip

Those who subscribe to my newsletter got the worldwide announcement first: I’m writing a book and promoting it with an 8000-mile, 19-state road trip!

Tradeoffs: Leveraging the Longs & Shorts of Life

Financial trader Matt Davio and I will use the language and practices of those who trade for a living to frame life’s tradeoffs: time for money, freedom for convention, risk for reward, and money for goods and services. Matt’s been interviewing subjects on his website for about six months now, and I’ll do my part from the road (mostly).

Every week I’ll be video blogging about where I’ve been, who I met and what I’ve learned.

In a post-meltdown world where so many people feel the stakes are higher and the margin for error more narrow than ever before, Tradeoffs will introduce a general interest reader to how traders view “scalp,” “swing,” “directional,” “fade” or “breakout” trading setups, how they mitigate risk, and how they live with the outcomes of their trades to do everything from choosing a career, mate and preschool, to helping a parent deal with end-of-life decisions.

Traveling America’s most storied highways

From NC I’ll travel through TN and AR to pick up what’s left of the old Route 66 beginning in OK. I’ll travel through TX, NM then veer north in Kingman, AZ to take in the Hoover Dam en route to Las Vegas for a layover with my parents and sister.

From Vegas, I’ll head west-northwest via the legendary Pacific Coast Highway to Eugene OR. After a layover with my co-author and his family in Bend, OR, I’ll head to Denver, CO to visit friends before heading east.

On the way back I’ll visit Mt Rushmore and Crazy Horse monuments, interview executives at the CME Group in Chicago, then head south to a suburb of Columbus, OH where I’ll visit with my brother (who rides BMWs) and his family.

The final leg of my journey will carry me through the West VirginiaTurnpike (Blue Ridge Mountains) and western VA before landing home in Charlotte.

That’s at least nineteen states, three time zones and a good 8000 miles.

Along the way I’ll frequent Diners, Dives and Drive-Ins and other famous Roadfood joints and occasionally couch surf with the community of financial traders who follow me on Twitter and my blog. I’ll include videos in my blog a couple of times a week and tweet daily. Most people will never take a trip like this, so I’ll do my best to bring you along (in the virtual sense).

Want to be interviewed, host an event or suggest a layover?

Want to sponsor part of this great adventure or know a company that might? Here’s what we’ve come up with so far:

• Motorcycle and gear sponsors
• Hospitality sponsors (food, hotels)
• Petrol products sponsors (fuel, oil)
• Related products: brokerage, mobile trading platforms, financial newsletters

And clients, I’ll be able to work from the road. I’ve got your back — even from two time zones away.

Gotta Love footnoted.org

Financial pros and self-directed investors alike appreciate the work that Michelle Leder at footnoted.org does speaking truth about powerful businesses and the people they overpay to run them. Good to know someone’s on the job ferreting out the things companies try to bury in their routine SEC filings.

Ms Leder found her calling as a forensic reader of company reports after losing part of her IRA on Qwest Communications. Conducting the post-mortem on that  transaction,Ms Leder realized that “instead of relying on happy talk from corporate executives and over-enthusiastic analysts, she should have spent her time reading the company’s SEC filings. In a little over an hour’s time, she found several red flags that pointed to overly aggressive accounting.”

A seasoned business journalist, she wrote Financial Fine Print: Uncovering a Company’s True Value and launched footnoted, which was acquired by Morningstar earlier this month. Proof positive that sometimes those who do good can also do well.

Be sure to bookmark or get a feed from footnoted’s blog.

Here’s a recent video of Ms Leder who, like me, works out of a home-based International Headquarters and is ably assisted by a canine.

February Book Lust

courtesy of Duke Magazine

No, the Birthday Fairy didn’t bring me a Nook last month, but now I wonder if I should hold out for an iPad. Your suggestions?

BUT WAIT! This just in! Apparently I’m not the only one who didn’t know you could download the Kindle software to a PC and start reading. Hmmm…anyone tried this? Please comment.

Speaking of reading technology, Duke Magazine featured a recap of a panel discussion on the future of reading “The End of Civilization as We Know It? The  central question was technology’s impact on how, what, and why we read. I particularly enjoyed the back & forth on Google’s Booksearch and this quote from Andy Berndt ’89, managing director of the Creative Lab at Google, “But we’re not interested at all in replacing books. A lot of people who talk about this haven’t even ever used Book Search. The hope is that if you can search for something about a topic, and you can find a book, even a snippet of a book, that exists somewhere else, you might continue to pursue that interest. If you can’t, you might not. And that seems hugely important.”

You Are Not A Gadget: A Manifesto

by Jaron Lanier

Amazon choose this as one of January’s best books, saying, “For the most part, Web 2.0–Internet technologies that encourage interactivity, customization, and participation–is hailed as an emerging Golden Age of information sharing and collaborative achievement, the strength of democratized wisdom. Jaron Lanier isn’t buying it. In You Are Not a Gadget, the longtime tech guru/visionary/dreadlocked genius (and progenitor of virtual reality) argues the opposite: that unfettered–and anonymous–ability to comment results in cynical mob behavior, the shouting-down of reasoned argument, and the devaluation of individual accomplishment. Lanier traces the roots of today’s Web 2.0 philosophies and architectures (e.g. he posits that Web anonymity is the result of ’60s paranoia), persuasively documents their shortcomings, and provides alternate paths to “locked-in” paradigms. Though its strongly-stated opinions run against the bias of popular assumptions, You Are Not a Gadget is a manifesto, not a screed; Lanier seeks a useful, respectful dialogue about how we can shape technology to fit culture’s needs, rather than the way technology currently shapes us.”

Here’s an excerpt from an interview with the author from Publishers Weekly

Q: As one of the first visionaries in Silicon Valley, you saw the initial promise the internet held. Two decades later, how has the internet transformed our lives for the better?

A: The answer is different in different parts of the world. In the industrialized world, the rise of the Web has happily demonstrated that vast numbers of people are interested in being expressive to each other and the world at large. This is something that I and my colleagues used to boldly predict, but we were often shouted down, as the mainstream opinion during the age of television’s dominance was that people were mostly passive consumers who could not be expected to express themselves. In the developing world, the Internet, along with mobile phones, has had an even more dramatic effect, empowering vast classes of people in new ways by allowing them to coordinate with each other. That has been a very good thing for the most part, though it has also enabled militants and other bad actors.

Q: Most authors have never made a living from selling their books. They’ve always had to teach or do something else on the side.

A: Sure, that’s also been true in music. But both music and publishing have always supported the creative middle class. So we’re speaking now at the Random House offices in New York. There’s a floor full of people here who are earning salaries and supporting families, who are not hit authors but are editors and publicists and all sorts of things, and they’re immensely valuable. This new world that many like Chris propose disenfranchises them completely.

In an earlier draft of the book I actually went through research on exactly what’s happened to the middle class in music, so if you go back to the start of the Web, there were hundreds of thousands of people filing taxes as musicians, only a tiny portion of whom did so on the basis of being known. But there were so many little jobs—session musicians, sound technicians—and that just fell off a cliff. I assert, and I think with good reason, that had we not screwed up in this way, we would not have had the recession. We have to be looking at results, and if the Internet was so great for wealth, then we should be getting wealthy. It has to be stated that simply.

IOU: Why Everyone Owes Everyone and No One Can Pay

by John Lanchester

I, like many, am suffering from meltdown forensics fatigue. But this book got my attention when I heard the author interviewed on NPR’s Marketplace.

Here’s an excerpt from NYT Review: Mr. Lanchester, who is British, isn’t an economist or a business journalist. He’s a novelist (and a talented one; try “The Debt to Pleasure”), a man with no special financial expertise whatsoever. A few years ago he began following the financial meltdown for research purposes, as background for a novel he was writing. He soon realized, he says, “that I had stumbled across the most interesting story I’ve ever found.”

Once upon a time in America and Britain, he observes, “the jet engine of capitalism was harnessed to the ox cart of social justice, to much bleating from the advocates of pure capitalism, but with the effect that the Western liberal democracies became the most admired societies that the world had ever seen.”

Then the Wall crumbled, and “the jet engine was unhooked from the ox cart and allowed to roar off at its own speed. The result was an unprecedented boom, which had two big things wrong with it: It wasn’t fair, and it wasn’t sustainable.”

“I.O.U.” crosses over into black satire when Mr. Lanchester describes how bankers used their new tools to make money from poor people, the worst credit risks, by prying their cash loose through predatory lending, then pooling this money and selling it off. Who cared if these people defaulted on their mortgages? The risk had already been passed along to others, and ultimately, when banks failed, to taxpayers. Mr. Lanchester calls this “a 100 percent pure form of socialism for the rich.”

With steam shooting from his ears, he summarizes: “So a huge, unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialized. That is literally nobody’s idea of how the world is supposed to work.”

Mr. Lanchester’s history lesson is peppered with dead-on references to everything, including “Annie Hall,” “The Simpsons,” “The Wire,” Hemingway and Jacques Derrida. He is effortlessly epigrammatical. (“In a sense, credit isn’t just an aspect of the economy, it is the economy.”)

Before you begin to cry, pick up a copy of “I.O.U.” Good humor and good company will be the things that’ll get us through.

Exploiting Chaos: 150 Ways to Spark Innovation During Times of Change

by Jeremy Gutsche

I’m writing a business book for a general audience, and read this one because I find the visual approach so refreshing. I want to emulate the approach in my work.

This video will do a better job of explaining it than a written review:

The Relentless Revolution: A History of Capitalism

by Joyce Appleby

I excerpted from the NYT Sunday Book Review:

Appleby, a distinguished historian who has dedicated her career to studying the origins of capitalism in the Anglo-American world, here broadens her scope to take in the global history of capitalism in all its creative — and destructive — glory.

In viewing capitalism as an extension of a culture unique to a particular time and place, Appleby is understandably contemptuous of those who posit, in the spirit of Adam Smith, that capitalism was a natural outgrowth of human nature. She is equally scornful of those who believe that its emergence was in any way inevitable or inexorable.

Appleby believes that intimations of capitalism’s rise first surfaced in the Netherlands, where an otherwise unremarkable country with few resources of its own managed to catapult itself to wealth and prominence in the space of a century. While Appleby lingers on the Dutch — and even manages to make things like the herring trade sound interesting — her principal subject is Britain, which she considers the true cradle of capitalism.

Her focus on Britain has little to do with William Blake’s “dark satanic mills” and other symbols of the Industrial Revolution. Instead, Appleby sees in mundane changes in agriculture the beginnings of later, more dramatic, developments. In 16th-century Europe, she observes, about 80 percent of the population was engaged in agriculture — roughly the same proportion as at the time of the Roman Empire. By 1800, the British farming population had dropped by more than half, thanks to innovations that produced a new, commercial agriculture, like crop rotation and the private enclosure of public lands. These efficiencies created a huge pool of surplus labor, setting the stage for the more visible British capitalism in the coming centuries.

It is to Appleby’s credit that she spends time on a subject like this, which is too often slighted in popular histories. In a similar spirit, she captures how a new generation of now forgotten economic writers active long before Adam Smith built a case “that the elements in any economy were negotiable and fluid, the exact opposite of the stasis so long desired.” This was a revolution of the mind, not machines, and it ushered in profound changes in how people viewed everything from usury to joint stock companies. As she bluntly concludes, “there can be no capitalism . . . without a culture of capitalism.”

Other books I wish I could find the time to read (but know I won’t)

The Hidden Brain: How Our Unconscious Minds Elect Presidents, Control Markets, Wage Wars, and Save Our Lives by Shankar Vedantam, a science writer for The Washington Post and a Nieman Fellow at Harvard University.

Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone dives into the latest psychological findings to investigate how and why prices are allocated.

Next month brings several reader reviews. Please let me know if you’re reading anything interesting that you’d recommend or want to review for an upcoming Book Lust post.

An Effective Apology

I remember when my elder son was about four or five and learning to say all the wrong things. One day he stomped into my room, ranting a string of expletives about his brother. He stopped mid rant, clapped his hand to his mouth, looked me in the eye and said “I’m sorry, Mom, my mouth was on fire.”

It’s hard to keep a straight face in situations like that.

Today’s agitated world creates situations ripe for effective apologies — from public officials and CEOs, to neighbors and family members — yet we too often find ourselves at a loss for how to give apologies earnestly or accept them graciously. Next time you need to apologize, turn to John Kador’s book and blog.

I had the good fortune of talking to John last summer and have heard him interviewed on this topic. He’ll show you how and why leaders who willingly and skillfully apologize make more money, enjoy longer careers and create stronger relationships than those who don’t.

Until you get your hands on the book, remember the Five Rs of an apology: recognition, responsibility, remorse, restitution and repetition.

Prompts for professionals

• John Kador says that some kinds of apologies make the situation even worse. If you’ve ever perpetrated a harmful apology, how can you turn the situation around? For example, let’s say your client left a trade request on voicemail — something your message reminds them not to do — and their trade wasn’t executed. Did you say something like “I’m sorry you didn’t follow the directions on my voicemail to call my assistant instead of leaving the request on my phone”? I bet that didn’t go over very well because it was a criticism wrapped in the language of apology. Perhaps something like this would be more effective:  “I know you lost money because that trade wasn’t executed. I feel awful about it. If I had received your voicemail in time I would have called you back and perhaps been able to minimize your loss. While I can’t make you whole on this transaction, I can assure you that if you (take this action) in the future, we can get your trade executed on time.”

• Is there a chance you can break a stalemate with an apology? Something like “Ever since (the event) our relationship has been strained. Although there’s been a lot of water over the bridge since then, I want to acknowledge that if I had it to do over again I would have treated you better. I hope you’ll accept my apology for (ignoring your phone calls/blaming you/etc.). Although I can’t wipe away the past, I’d like to ask if you will give me another chance to work something out. If you do, I promise to (return your calls/refrain from blaming/etc.).”

• Is there a situation where your company has taken a stand you disagree with and you’re caught between it and a customer? Is there a way you can apologize and accept some of the blame instead of throwing your company under the bus?

Banker Motivation

As I mentioned in December Book Lust I’m reading Dan Pink’s new book Drive: The Surprising Truth About What Motivates Us. The book’s publisher had perfect timing, with  January’s headlines of banker bonuses and the prospect of taxing TARP recipients.

There’s a lot of hand wringing about what will happen to the entire economy if the financial sector is reined in:

• Will “under paid” (therefore presumably under qualified) bankers screw up the economy?
• Will all the good financiers move to hedge funds, leaving our big banks in the hands of a bunch of brain-dead drones willing to work for a mere 25x their average company worker’s wage?
• Is limiting banker compensation the last nail in capitalism’s coffin?

And then there’s the rumor that Goldman Sach’s Lloyd Blankfein will be taking a $100m bonus for 2008′s work. That’s in contrast to the US Census Bureau’s report that the average 2008 per capita income was just under $27k. I don’t think the feudal lords of the dark ages made those multiples.

Before jumping in with Drive‘s analysis of human motivation,  I’ll let The Daily Show guide us down memory lane with those to whom much was given and nothing was demanded:

The evolution of motivation

Mr Pink says Motivation 1.0 centered around survival. Sometimes survival meant stealing a meal or a spouse but eventually the human species figured out that cooperation was a less painful, more humane way to conduct ourselves, and Motivation 2.0 came into being.

Motivation 2.0 centered around punishment and reward and “it is so deeply embedded in our lives that most of us scarcely recognize that it exists.”

Despite its greater sophistication and higher aspirations, Motivation 2.0 still wasn’t exactly ennobling. It suggested that, in the end, human beings aren’t much different from horses — that the way to get us moving in the right direction is by dangling a crunchier carrot or wielding a sharper stick. But what this operating system lacked in enlightenment, it made up for in effectiveness. It worked well, extremely well. Until it didn’t.

The Seven Deadly Flaws of Carrots and Sticks:

1. They can extinguish intrinsic motivation
2. They can diminish performance
3. They can crush creativity
4. They can crowd out good behavior
5. They can encourage cheating, shortcuts, and unethical behavior
6. They can become addictive
7. They can foster short-term thinking

This is not to say that carrots and sticks are always bad

Drive has a chapter on circumstances where punishment and rewards work very well, thank you very much. But we’re headed full gallop into Motivation 3.0, which recognizes that while people are at times profit maximizers (and therefore extrinsically driven), we are also “purpose maximizers,” which means we’re motivated intrinsically as well.

For the word lovers among us, “purpose maximizers” has its own Latinate descriptor: Homo Oeconomicus Maturus (Mature Economic Man).

Bruno Frey, an economist at the University of Zurich says “Intrinsic motivation is of great importance for all economic activities. It is inconceivable that people are motivated solely or even mainly by external incentives.“

Mr Pink lists several highly successful business people who are driven by intrinsics to achieve and even asks us to ponder whether the intrinsically-motivated Warren Buffett and Oprah Winfrey are any less economically successful than Jeff Skilling and Donald Trump (whom most would agree are Motivation 2.0 poster boys). 

What about the bankers?

Americans are stuck in Homo Oeconomicus (Economic Man) mode, instead of Homo Oeconomicus Maturus mode. We aspire to big bucks ourselves, so while there’s still a chance we can make the current system work for us, we’re loathe to reform it. I think this is why we  didn’t DEMAND taxpayer representation on the boards of the organizations we taxpayers saved from the ash heap in October 2008. That,  plus the fact that the moneyed class and the politicians they own have convinced us that we should fear big government more than big business (or perhaps anything else).

We’ve seen what extrinsically motivated bankers can do for society. I’m sure we can find some Homo Oeconomicus Maturus boards and managers out there — aren’t they the ones running credit unions?

Maybe Sir Richard Branson could bring “Virgin Money” to the US, too. The CEO (a woman!) says “Our aim is to make ‘everyone better off’ in the way we do business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a growing profit to shareholders. Our approach to banking is founded on developing a sustainable, savings-based business.”

Finally, I’m not in a position to judge whether Lloyd Blankfein believed himself when he declared that his firm does “God’s work.” Stephen Colbert seems to have an answer to that question:

The Triumph of Snail Mail?

Although I write a lot about e-newsletters and social media communications I’m always on the lookout for merging them with old school direct mail. I was prepared to skip this WSJ article on direct mail because at first glance it pertained to retailers.  Then the article told of an insurance broker using humorous postcards (including the one above) to great effect and I stopped skimming. The broker told the WSJ that when he stopped sending postcards clients complained — many of them collected the cards  as “cubical art.” When he resumed his postcard campaign, he scored a $270,000 new account.

This reminds me of the days when computers replaced handwritten correspondence and press-on labels — I opened the printed envelopes first. But now the novelty of a handwritten address gets my attention. Same with email — the novelty has worn off and most of us are filtering, unsubscribing and otherwise purging senders from our busy lives.

The article offered this as best practice for snail mail:

The idea is to send something that’s more appealing than “junk” mail and potentially more noticeable than an email message, says Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management. That allows business owners “to offer a personal touch the larger firms may not be able to have,” he says.

How well do you know your tribe?

I’m all for using whatever works for your audience, your tribe. I recently read Crush It! by Gary Vaynerchuk, known to many as the Wine Library TV guy. He’s crushing it on social media, especially video, and shares both his philosophy and tactics in the book. I picked up a thing or two from Gary myself (once I slim down I might even try some video!).

On the other end of the spectrum, one of my clients’ tribe is not web savvy, so she takes extra pains to label hot spots on her website (“click here”) instead of relying on them to mouse over without a prompt.  She recently discontinued her printed newsletter, started a blog and sends an email with each blog post.  I, on the other hand, don’t want to clog my subscribers’ inboxes with each blog update — a monthly newsletter with links to the past month’s posts works for my tribe.

Let’s start a productive conversation. I shared my content recycling strategy here – what’s yours? Here’s a little something on email’s dominance over social media – is this the case for your business? Please share your experience combining any and all forms of business communications/channels/media.

January Book Lust

This month we have a fiction entry in Book Lust by writer Barrie Abalard, who reviews the latest book in the series that inspired the Golden Globe winning “Dexter” TV series.

Want to review a book for February? Please let me know.

In the continuing discussion about e-readers I asked a hedge fund manager who follows technology to weigh in on the Kindle versus Nook choice for my birthday. He goes by “Dasan” online. Here’s what he says.

Happy Birthday, Tamela – I know you’ve been considering whether to buy a Nook or a Kindle. I’ve got some ideas for you.

First, the most important thing is your decision to buy an e-reader in the first place. In 20 years or less, printed-paper books will be as common as a scroll of wizardly runes is today. People will look back and wonder why books didn’t migrate to digital delivery before music and movies did. But today the question remains – to Nook or to Kindle?

You say you’re leaning toward buying the Nook because it runs on Android and you are bullish on where Android’s headed. Sorry, but you’re missing the whole point of e-readers. The point of the e-reader is to “disappear” in your hands and let you drift into that trance-like state of reading. When I’m reading Dune for the 5th time on my Kindle, I don’t even know what an operating system is. You love libraries and bookstores; that would seem to make a Nook the obvious choice, with its physical stores. Barnes & Noble has promised to let you use your nook to read books for free in their stores. Before you get too excited about that, you better look at their financial statements. Did you know that they are in the process of closing all of their B. Dalton bookstores? I wonder how long they can keep their physical stores. I loved record stores – can you find one for me? Buy a Kindle, and you don’t buy an e-reader, you buy access to the entire Amazon bookstore. But the Nook sure has a piece of hardware, with a great color second screen and that wonderful rubber backing! The decision is obvious – buy one of each!

Thanks, Dasan. Sounds like I can’t lose. I’ll let you know whether the Birthday Fairy brought me either of these.

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves

by Andrew Ross-Sorkin, reviewed by Jim Gobetz

The book chronicles the events leading up to and surrounding the recent economic turmoil It is the third book on the topic I have read and by far the most exhaustive and detailed. Mr. Ross-Sorkin has unparalleled access to the key players in the events and a very flowing and easy to read writing style. He describes the characters in an unbiased manner and I came away feeling that he was quite neutral on everybody. This is a fair contrast to “The Sellout” by Charles Gasparino whose opinions of the players are obvious.

The book was good to great from cover to cover, but I am somewhat reticent to recommend it to anyone who is really not a total economy wonk like I am. The casual observer is likely to get bogged down in the details as there are literally hundreds of players and their interactions read like those of the Plantagenet’s. If you are really keen to get inside the events of 2007-2009 you won’t find better access, Mr. Ross-Sorkin has interviewed all of the key and nearly all of the ancillary players many times in his role with the NY Times. I follow the market and the political events that relate to it like a stalker, yet still I learned quite a few new things and gained new insight into the minds of the rainmakers that led us in and out (hopefully) of the debacle.

So for the fanatics, go for it, it’s a joyride through a subject you can’t get enough of. For those of a more relaxed interest, you’ll have to decide if you’re interested enough for 800 pages or so on this particular topic.

Bonus: my friend Matt Davio interviews Mr Sorkin.

Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics

by William Bonner and Lila Rajiva, reviewed by Jim Gobetz

This book attempts to link the three title entities into a treatise on the human condition from which they sprang. Unfortunately the book is like a roller coaster, looping back and forth, and in and out of the topics in a way that was in my opinion uncoordinated. I am not a writer of books but I suspect a failure on the part of the editor is greatly responsible. Each chapter is interesting in and of itself but taken as a whole it makes no conclusions. The authors are at times strident and appear to be approaching a point which is never made, or they make a point that is unsupported in the context of the chapter but is in another chapter.

I have the feeling that if the book had been organized in a better fashion I might be writing a positive or even very positive review, but as is I cannot recommend it. Sadly, while the title elicits interest the text fails to deliver.

Think Twice: Harnessing the Power of Counterintuition

Dexter by Design (how timely, after Sunday’s Golden Globe awards)

by Jeff Lindsay,  reviewed by Barrie Abalard

Summary: A good read for Dexter fans, but not Lindsay’s best. If you’ve never read any of the “Dexter” novels, start with book one, Darkly Dreaming Dexter, in order to read this one (book four) in context. If you’ve only watched the Showtime TV series, be aware that the plots of the series and the plots of the books diverge greatly. Three and a half out of five stars.

I discovered Jeff Lindsay’s “Dexter” novels about six months before the Showtime series began. During that six months, when most of the world didn’t know the books existed, I was practically stopping strangers to rave about Lindsay’s writing and characterization. My family grew thoroughly sick of my Dexter talk. And then… the series began, with the first season repeated on one of the broadcast networks (CBS, I believe), and suddenly everyone knew what, and who, I was talking about.

Thus, Dexter by Design was a book I waited for with great impatience. And it mostly satisfies. Mostly. But it doesn’t get near the admittedly high bar Lindsay set for himself with books one and two (Darkly Dreaming Dexter and Dearly Devoted Dexter) and the slightly less spectacular but still excellent book three, Dexter in the Dark.

I believe a large part of the problem with the book’s momentum—it takes a while to get off the ground—lies in the beginning. Dexter and Rita, his new wife, are honeymooning in Paris. While Lindsay wraps up the honeymoon intro fairly well, setting the stage for the rest of the book, the story would have been stronger if he’d opened with Dexter doing his thing in Miami, as usual, and then working in remembrances of his honeymoon. I think the horror that serves as the end to the honeymoon scenes would work better if it were teased out over the first fifth of the book or so.

I also found Lindsay’s writing in the first chapter a bit irritating, before the book settles down into the sardonic commentary that is his (and Dexter’s) forte. The observations about Paris and art strike me as too floridly written, and not consistent with Lindsay’s usual clean style. I was annoyed, frankly, waiting for the real action to begin.

But, it’s not a huge quibble if you are a “Dexter” fan, which I am. Once the story returns to Miami, where Dexter works as a blood spatter analyst for the police crime lab and moonlights by taking out evil folks with his sociopathic relish, the story regains its footing. The tale is one of viciousness as well as absurdity, with some surprise turns that keep the momentum going. Unfortunately, the ending is a bit weak, as well as completely unsurprising, which disappointed me.

Lindsay’s first two books knocked my socks off. The third one, Dexter in the Dark, was only a shade less amazing. Lindsay takes chances with his main character that, in the first three books, made me gasp with surprise and pleasure as he spun plots that eventually resolved in a satisfying way. If you’re a fan of the popular homicidal character and haven’t read Dexter by Design, by all means do so, as long as you’ve read the first three books beforehand. But be prepared for that twinge of disappointment here and there.

I’ve written a series of stories with repeating characters myself, so I know it’s difficult to tell the tales and reveal new aspects of the main characters over the course of several storylines. It takes mastery of the art of fiction and a polished, smooth style, both of which Lindsay has (and I don’t, but I’m working on it). I’ll wait to read book five before I throw in the towel on Lindsay and his “Dexter” series.

Because You Can’t Spell Gold without G-O-D

The goddess Juno Moneto from whose name "mint" and "money" are derived

In our current frenzy for certainty in an uncertain world, gold is back in the news. Time for a little context on the current gold rush, starting with a tale from antiquity:

A man who wanted riches dutifully installed a money god in his home altar. He prayed to it for hours every day. His knees ached and his forehead bore a bruise from his repeated prostrations.  He persisted in the fanatical belief that he was on the true path to prosperity despite the daily worsening of his situation.  One day he flew into a rage with the god for all the time he’d wasted, picked up the little clay god and smashed it on the altar board, revealing a cache of gold coins.

The moral? I’ve heard a few including:

• We must slay our conceptions to achieve a breakthrough
• Praying for money brings us to rage and despair
• Money can be hidden in plain sight
• Go deep inside religion/a spiritual path to find true prosperity

The Wizard of Oz: an American tale of gold?

The last time I gave gold any thought was business school ten years ago when my micro-economics prof told us that some people considered The Wizard of Oz to be an allegorical story about America and the gold standard.  BBC News summed up this story, reminding us that Judy Garland’s ruby slippers were a departure from the silver slippers of Baum’s original tale, which some believe represented the promise of a dual gold-silver standard.

Baum published the book in 1900, just after the US emerged from a period of deflation and depression. Prices had fallen by about 22% over the previous 16 years, causing huge debt.

Farmers were among those badly affected, and the Populist political party was set up to represent their interests and those of industrial labourers.

The US was then operating on the gold standard – a monetary system which valued the dollar according to the quantity of gold. The Populists wanted silver, along with gold, to be used for money. This would have increased the US money supply, raised price levels and reduced farmers’ debt burdens.

CHARACTER SYMBOLISM

Dorothy: Everyman American

Scarecrow: Farmer

Tin Woodman: Industrial worker

Lion: William Jennings Bryan, politician who backed silver cause

Wizard of Oz: US presidents of late 19th Century

Wicked Witch: A malign Nature, destroyed by the farmers’ most precious commodity, water. Or simply the American West

Winged Monkeys: Native Americans or Chinese railroad workers, exploited by West

Oz: An abbreviation of ‘ounce’ or, as Baum claimed, taken from the O-Z of a filing cabinet?

Emerald City: Greenback paper money, exposed as fraud

Munchkins: Ordinary citizens

A post-Depression history of gold prices

With a new gold rush in the news I wanted some historical context, which I plucked selectively from USAGold.

April 5, 1933: President Roosevelt, acting under the sweeping authority passed to him by Congress on March 9, invoked his authority to make it unlawful to own or hold gold coins, gold bullion, or gold certificates. The export of Gold for purposes of payment was also outlawed, except under license from the Treasury.

January 31, 1934: President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold “nine-tenths fine”. The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold – or 40.94%. The Treasury, which had become the possessors of all the nation’s Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now “owned” the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.

Bretton Woods in July 1944: The new ratio of $US 35 was adopted and the U.S. Dollar was made the world’s Reserve Currency.  The now international ratio of 35 U.S. Dollars to one troy ounce of Gold lasted until August 15, 1971.

January 1961: Shortly after President Kennedy was Inaugurated and  newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price of Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the “London Gold Pool” in early 1961.

The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in spring of 1968.

January 1975: After 42 years, it again became “legal” for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process.

July 1979: Paul Volcker was appointed as Fed Chairman while  gold continued to surge, hitting $400 in October. While this was happening, Mr Volcker was attending a conference in Belgrade. There the assessment was made that the global financial system was on the verge of collapse. When Mr Volcker returned to the U.S. from Belgrade, he took a momentous step. He announced that the Fed was swiching its policy from controlling interest rates to controlling the money supply.

I worked at a jewelry store in 1980 and learned how to spot-price our gold merchandise because it was a waste of time to affix labels to the inventory.  U.S. interest rates skyrocketed. As they rose, the dollar first slowed it’s descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold was lured back into paper by this huge rise in interest rates – and by the prospect of a higher U.S. Dollar. The threat of financial meltdown was averted, but at a cost. The U.S. Prime rate hit 20% in April 1980 and stayed there (with a brief dive in mid-1980) until the end of 1981. There was a rush out of Gold and back to Dollars.

Once interest rates began to come down, in early/mid 1982, the choice of where to put the Dollars faced investors once more. The initial solution was just as it had been in the 1970s. The Dow took off – rising from 776 to almost 1100 between mid August 1982 and late January 1983. Gold fell $105 in the last four trading days of February 1983. As it fell, the Dow broke above the 1100 point level for the first time. The long bull market in stocks, and the long stagnation of Gold, had begun.

Post-meltdown gold rush

Fast forward to 2010 with stories about home parties where a jeweler brings in scales to buy party goers’ jewelery.  What gives? As investor Jim Gobetz said to me, “Gold is traditionally (at least in the age of fiat currencies) a hedge against inflation.” Problem is, in certain circles, the fear mongering is unavoidable, deafening and self-serving.  Take Glenn Beck’s hucksterism, as exposed on The Daily Show:

If you prefer something more buttoned down, PBS’s NewsHour did a thorough job examining the current gold rush.

Gold as a sure thing

Gold investor Bob Chapman recently said “Gold and silver are the only real way to protect against financial calamity and offer possibilities for profit simultaneously.”

Really? If so, why are gold promoters letting the rest of us in on the security? Because they want to sell us something and make money on our insecurities. If gold really offered true protection, guys like Beck and Chapman would be hoarding — not promoting.

In The Secret Life of Money, I learned a lot about the history of money, including its many forms, from seashells and porpoise teeth to tobacco and beaver skins, to, of course, gold.  Author Tad Crawford tells stories of how belief in the value of something transcends rationality, and sometimes, practicality.

For example, the Yap people of Micronesia used giant limestone discs for currency.  These discs were so difficult to transport that eventually people left them in place with the communal understanding of who truly possessed the “wealth.”  So isn’t gold similarly “accepted” as valuable despite its impracticalities as a currency?  Do we really expect to carry bullion around? And do we want to carry a beaker of acid with us every day to test the purity of coins and bullion exchanged for goods and services? If we all believe gold is the only ultimate thing with intrinsic and everlasting value, then it is. It’s our belief that matters.

Crawford’s book discusses at great length the connection between money and the divine, from the ancients who minted coins with faces of divinities (see Juno Moneta at the top of the post) to the practice of stamping “In God We Trust” on American currencies since 1864.  ”If the phrase means nothing, perhaps we should put ‘In the Federal Reserve We Trust’…In times of recession and depression, this slogan offers a way to understand why money fails us. Money, although a secular tool, requires our belief in the richness of a divine power.”

I think times like these serve the purpose of reminding us of how uncertain life really is. We middle-class Americans thought we’d somehow transcended subsistence issues like food and shelter, but the meltdown has driven record numbers of Americans onto food stamps and out of their homes. We thrash about for something certain and land on gold — the modern analog of a Micronesian Yap’s limestone.

Security is a head game — as JM Keynes reminded us, “In the long run, we’re all dead.”

Weighing in on the gold rush with some spiritual advice is Baha’u'llah, the Prophet-Founder of the Baha’i Faith:

Busy not thyself with this world, for with fire We test the gold, and with gold We test Our servants.

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