Tag Archives: reviews

Review – Totto-chan (#nonfiction, #reading, #Japan, #education)

Totto-chan: The Little Girl at the Window (buy on Amazon.com)

by Tetsuko Kuroyanagi, published 1981

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

What a wonderful book! I’ve never read anything quite like it, although it reminded me quite a bit of various Hayao Miyazaki animated films I’ve seen in the past. “Totto-chan” is a memoir in the guise of a novel. The author’s childhood self is the main character and the events described actually took place while she attended a creative school called Tomoe Gakuen in pre-war Tokyo. This proves to be an interesting narrative device because the story is told from the emotional and experiential point of view of a child, but with the knowingness and articulateness of an adult. The obvious fondness or at least understanding of the author toward her younger self serves to enhance the overall sensation of empathy the story engenders, for that is the primary theme of the school and what the children were learning there.

Led by the visionary headmaster, Sosaku Kobayashi, the Tomoe school’s philosophy is built on trusting children to be themselves, “let nature lead” as Kobayashi put it. The story is filled with anecdotes of Totto-chan and her classmates being entrusted to figure things out for themselves, with adults and authority figures like the headmaster and parents simply listening and providing confidence that the children will succeed in coming up with workable solutions as they learn to navigate the world around them. Mistakes and slipups (such as Totto-chan falling into the school’s cesspool) are treated with dignity and patience. Instruction and structure come in the form of simple guidelines (for lunch, students were asked to bring “something from the hills and something from the sea”) with the belief that the children will be motivated to find their own solution with a limited amount of information.

The effect on the children is a unique sensation of freedom and capability, of openness and consideration of themselves and the needs of others. Seemingly without encouragement, the school spontaneously forms a meaningful, interested sense of community and ownership by the students toward their school grounds, neighborhood and classmates. Left to pursue their studies and interests at their own pace, some students excel through deep study and careful focus of a particular subject while others enjoy sampling disparate bits of knowledge and experience without a plan. All students appear happy and enthusiastic about their lives, even those students who come to the school with severe developmental handicaps. As the author says, this liberty allowed a lot of children who were misfits in the standard schooling regime to find a sense of ease and belonging and to go on to live productive, independent and connected lives as adults.

The story gives the reader a glimpse of an educational philosophy and pedagogical approach that is at once intuitive and mysterious: why shouldn’t every school demonstrate such empathy and concern for its students; and how DOES Mr. Kobayashi manage to have such patience and a sunny disposition toward the antics of small children that are considered so “obnoxious” by nearly everybody else? The epilogue of the story summarizes some of the research travel Kobayashi performed in Europe for several years leading up to the founding of the Tomoe school and it becomes clear that there is a dedicated, principled purposefulness to every single event in the story, which the author as an adult reflects upon in the present with a “Oh, so THAT must have been what Mr. Koboyashi was trying to teach us there…” To a cynical mind it may seem almost exploitative to be so cunning in one’s schemes, but if the ultimate goal of the approach is to develop in the students the maxim “Trust yourself”, how nefarious could this stratagem actually be?

The school seems like a very “social” place and less like an academy– numerous field trips, “sports” days, music and exercise classes and camping overnights pepper the plot and while there is a library and scenes of students doing self-directed physics studies with alcohol burners and beakers, they always take place in Tomoe’s disused railroad cars-cum-classrooms. It’s a challenge only to those readers with a constricted view of what education and learning necessarily mean. For Kobayashi and his students, every experience brings teachable moments and the question begged and answered is why reading about flora and fauna in a textbook is a superior approach when one can go outside for a walk and study the variety of life up close.

From the view of paranoid American parenting, the children disrobing with their teachers and swimming naked together in the school’s small pool will seem like a perfect opportunity for secret child abusers amongst the faculty to get their jollies. But the lesson here seems to be that every choice in life brings with it risks and if bathing suit-less swim time is a useful means for helping the children (especially the physically handicapped) to appreciate and accept their differences and similarities such that they can have confidence about who they are and act with kindness towards everyone else, the risk of something monstrous or mean-spirited in such an environment might be a better risk to take than watching certain individuals grow up feeling alienated from themselves and others for lack of such experiences.

Indeed, those same paranoid parents would be wondering how a child could ever develop a moral sense without correction and punishment from adults. It is enjoyable, then, to witness the many moments when Totto-chan attempts to do something underhanded or less than honest (with herself, her parents or her friends) but recognizes the moral inconsistency of her actions on her own and eventually makes amends and moves on. It makes you think that children are capable of so much more than they are given credit for, typically, and that maybe the moral failings of children reflect not their immaturity, but the perverse incentives of the adults who guide them.

This is a humorous book, as well. There were many moments when I couldn’t help but laugh out loud and recount a passage to someone nearby, they’re just too good not to share. And thankfully, there are moments of profound tragedy and despair. I say thankfully, because it is in these recollections that we are truly reminded of how precious life is and what a wonderful gift a school like Tomoe is.

One of those tragedies is that the Tomoe school burned to the ground near the finale of the Pacific War as Tokyo came under increased firebombing by the US Air Force. It’s a stark reminder of the injudiciousness and unfairness of war, even though it is recounted without particular frustration or anger on the part of the author (a testament to the empathetic spirit of the school itself!) But there is also a lesson in the resilience of the creative spirit, as Kobayashi’s only response is to ask, “What kind of school shall we build next?

The good news is that we don’t have to suffer war or burn our schools down to ask that question ourselves.

I think this book can be enjoyed by children, parents, families, teachers and social theorists and anyone concerned with building a more empathetic society built upon respect for the individual and the instinct of trusting oneself.

5/5

 

Review – Father, Son & Co. (#family, #business, @IBM)

Father, Son & Co.: My Life at IBM and Beyond (buy on Amazon.com)

by Thomas Watson, Jr., published 1990

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

The son of IBM’s founder, Thomas Watson Jr.’s “Father, Son & Co.” is many things: a collection of folksy business wisdom passed down by his father, memories and recollections of his participation as an airman in World War II and later a US diplomatic career in the USSR, a story about the challenges of growing a global business, lessons in leadership and team building, the pitfalls of transforming an business organization from small scale to large scale and, most importantly, a personal reflection on the value of family. It was most interesting and entertaining for me to read when it dealt with business and some of the personal issues of the author in trying to prove himself in the shadow of a legendary father; I found it less enjoyable and less authentic when the author dabbled in politics or retold sappy anecdotes about popular political figures of his era with whom he had had personal relationships.

The Business of IBM

The axis around which the story revolves is not Tom Watson, Jr., and it’s not Tom Watson, Sr. It’s the company which Senior grew and transformed into IBM, and which Junior effected the change over to actual computing technology in the 1960s, that the book is really about. But because Junior’s and Senior’s personalities, families, fortunes and lives were so wrapped up in the affairs of IBM, it becomes about all of those things in turn as well. That is somewhat surprising because the book is ostensibly a memoir by Junior, yet the gravity of IBM is hard to ignore in nearly every chapter of the book.

When Senior joined on with the company as general manager and, shortly thereafter, president, IBM (then Computing-Tabulating-Record Company) was an important concern but not necessarily a large one. Senior had a vision for it and something of an indomitable will, and he had experienced enough success and failure on his own in other ventures that he had an idea of what it would take to create the vision he had for the company. He built a large, organized and polished sales force, instilled high morale and unity of purpose by creating training programs, achievement awards, national sales team conventions and even company songs that everyone had to sing. He also, like many strong-willed founders, created something of a cult of personality around himself, putting his picture up at IBM offices and facilities, writing memos that were distributed widely to all staff and constantly visiting field offices and manufacturing facilities and “pressing the flesh” with company men and their wives and children, creating a kind of endearing aura of patriarchy.

In later years this intuitive, personality-driven approach was deemed problematic by Junior and other successor senior executives who believed that Senior had created a culture and cadre of Yes Men and hadn’t implemented enough standards and professional protocols that could create stability for growth. But for decades of the company’s history (essentially the first half, to date) this approach seemed to work, and fantastically so. Company publications like “Business Machines” and sales achievement distinctions like the “Hundred Percent Club” put the company’s focus on employee well-being and professionalism and incentivized outstanding achievement in the dawn of the era of lifetime commitment to big companies.

Something that shocked me as I read was how much of IBM’s growth could be attributed to solving statistical problems for the US and other national governments:

IBM more than doubled in size during the New Deal… Social Security… made Uncle Sam IBM’s biggest customer.

Wow! I suppose someone else could’ve come up with the technology as well, but it is kind of amazing to think that the evil New Deal and the disastrous Social Security pyramid scheme would have been too burdensome to administer without the existence of IBM tabulating machines which were a major time saver. It reminds me of Palantir Technologies, which helps the NSA, CIA and other foreign governments conduct surveillance work on target populations, another way to profit off of coercive interference in society’s affairs.

This trend didn’t stop with the New Deal but only started there. During WW2 the company converted many of their factories to help produce armaments (a fairly common industrial practice during the time, but still remarkable) and after the war one of the big incentives (and indeed, initial sources of research funding) for switching the company’s focus to electronic computing solutions were the ongoing “national defense” needs of the US military as the Cold War wore on.

Words of wisdom

I enjoyed the many old-timey nuggets of wisdom and rules about manners sprinkled throughout the book which were mostly remembrances of Junior of things Senior had said to him as he raised him or mentored him in the business. For example, Junior talks about the first time he road a cross-country train with his father on a business trip and the way his father taught him to clean up the wash basin in the bathroom of the railroad car to be considerate of others. “The person coming after you will judge you by how the place is left,” he tells him as he uses a towel to wipe down the basin before and after shaving in it. He talks about the importance of leaving the basin in a clean state so that the next person will have “the same chance you had”. There is a deep moral lesson here that goes well beyond the world of men shaving– this is a version of the Golden Rule, not just considering how upsetting it would be to have someone leave a place in a state of disarray for you, but then following that logic through to performing a service voluntarily for other people in trying to leave the world a little bit nicer than you found it.

In another instance, Senior lectures Junior about the practical reasons for treating even the “lowly” members of society in a kindly and generous fashion:

There is a whole class of people in the world who are in a position to poor-mouth you unless you are sensitive to them. They are the headwaiters, Pullman car conductors, porters and chauffeurs. They see you in an intimate fashion and can really knock off your reputation.

Those who enjoy shows like Downton Abbey are familiar with the idea that the “servants” of the world end up having an interesting amount of power and leverage over those they serve because they are so familiar with them they know their weaknesses, secrets and bad habits. There is something noble and self-aware in Senior’s advice here– a cultivated awareness of the reality of power and influence, mixed with a genuine empathy for treating even the relatively less fortunate with respect and concern. It might be read as “These people could really knife you if you don’t pay attention” but I think it is also honestly read as “Don’t forget these are people, too, and they want and need kindness regardless of their station in life.”

Another endearing moment comes when Senior teaches Junior about how he manages his executives:

“Well, I haven’t shaken up So-and-so for a while. So I’ll get him in and ask some questions about his department and in the process part his hair a little. He’ll get a pat on the back if I find something good or a kick in the tail if I find something bad.”

The imagery of “parting someone’s hair” says a lot about the relative authority of the two people in this “process” and while kicking someone in the tail sounds like bullying, it was clear that Senior gave quite a few pats on the back, as well, and when he dished out the ass-kickings, they might have been deserved– these were grown men dealing with a multi-million dollar business, after all, and if they weren’t bringing their problems to Senior’s attention but rather waiting for him to discover them, shame on them.

In teaching Junior about how to be an executive, Senior advised “what a chief executive does outside his business is just as important as what he does at his desk”, which was another idea I found interesting. I’ve been skeptical in the past of chief executives who seem to spend more time glad-handing than running the business. But I’ve come to appreciate that a lot of running a business simply is taking care of relationships– with customers, employees, vendors and even members of the local community. IBM’s business was dependent upon political grace, so there is perhaps a more sinister side to this advice from the standpoint of simply being a businessman but it was an interesting idea to ponder, nonetheless, that the chief executive’s identity and role extend beyond his office hours.

Senior was clearly a hard-driver and a hard-charger himself. So I was interested to hear about his daily routine:

He had his day set up so that he got up at seven, played tennis from seven-thirty to eight-thirty to stay in shape, got to work on time, did his work, went home, read great books for an hour, had dinner, listened to classical music for a while, and went to bed.

Senior ended up dying of starvation; his stomach was so scarred from stress-induced ulcers that it essentially closed up and wouldn’t let enough food in, and he didn’t want to go under the knife and so chose a fairly painful death by starvation (more on health issues in a moment). But despite this, he lived to age 82! I think that’s still considered a long time to live and I am always curious what a person’s habits were when I hear of such longevity, so it was pleasing to see that he put emphasis on daily physical activity as well as daily relaxing, contemplative activity (reading and music listening). Interestingly, breakfast didn’t seem to play a large part in his routine although Junior recounts many times when he had lunch brought in despite it being ignored in this telling.

A few other choice ideas, on restraint:

What you haven’t said, you can say anytime.

And on the value of friendship:

Don’t make friends who are comfortable to be with. Make friends who will force you to lever yourself up.

The son also rises

So, Senior had a knack for keen insight, but what about Junior?

While Senior was the builder, Junior was the administrator and manager. He seemed to take what he learned from Senior and build on it, so many of his notions seemed like continuations of the thoughts of Senior. For example, consider Senior’s advice about how chief executives should behave as Junior extemporizes about the relationships of businessmen:

A good businessman needs a lot of friends. Cultivating them is a laborious process, and how well you succeed is a direct result of how much effort and thoughtfulness you bring to bear.

He isn’t talking about friends in the business. He’s talking about friends outside of the business, which to me sounds like an echo of the idea that the chief executive’s job extends well beyond life in the office.

Similarly, he recounts a tale about the importance of making good introductions,

I stuck out my hand and said to him, “I’m Tom Watson Jr.”

Offering one’s name with a hand shake ensures that the other person is not put in the uncomfortable spot of being expected to remember people he’s only met once before, which engenders a sense of gratitude and respect immediately. Consider that this was the practice of an individual leading one of the largest and most well-known companies in the world and he still made the effort to be forward about his identity like this.

I also made a note of Junior’s characterization of the political structure of business:

The government has checks and balances, but a business is a dictatorship, and that is what makes it really move.

I think there is consensus building in business, too. It’s hard to keep a team cohesive and productive over a long period of time if people don’t feel like they contribute ideas and that those ideas get seriously considered. But I do understand the idea that ultimately decisions have to be made by somebody, that is, one person, and a business with a strong will behind it can make those decisions more effectively because everyone may be listened to but they don’t necessarily all get a vote. In the business world, people tend to vote by exit which is rarely an option in the world of politics.

The wealth of health

As mentioned earlier, Senior ended up choosing death by starvation when his health maladies caught up with him, though he made it to age 82. I noticed that both Junior and his younger brother (who headed up IBM’s non-US business) suffered heart attacks in their middle-age, attributed to the high stress of their positions.

Junior describes a life of almost continual travel and social functions, not just for himself but for his father and his brother. It was clear reading the book that the Watson clan and IBM executive leadership in general were part of the “global elite”, they knew dignitaries and heads of state from around the planet and were deeply connected to American political figures as well, a confusing blending of public and private prerogatives and relationships. There were many chapters where Junior described so many different locales and travels simultaneously that is almost seemed as if he was everywhere at once– at the very least he would spend long stretches of time away from home engaged in high level networking. It was a fascinating glimpse into “how the other half lives.”

But it was also terrifying from a health point of view. It is just hard to imagine this high-paced lifestyle allowing one to live with optimal health and longevity. Along with suffering a heart attack, his brother seemed to be frail enough to die from a “fall” at age 55. Junior ended up quitting his official business responsibilities following his heart attack which he reflects on with positivity in the book, saying it was a relief to have an opportunity to look critically at his life and get out while he still could. It seems to say a lot about the lifestyle he was living that he could so clearly connect his longevity to his work and chose the former over the latter.

Working with family

At the beginning of the book, Junior says that if you have the chance to go into business with your father, know that it will be difficult, but do it. I was fascinated by this strong suggestion given that he spends much of the rest of the book relating all the violent disagreements he had with his father, their latent power struggles, the continual struggles with self-esteem and even depression that he experienced living and working under the shadow of his successful father and so on.

There were many touching moments in the book where the reader is afforded a look at the parenting practices of Senior, who was truly from a pre-modern era. But there were also many that shocked my sensibilities of the proper relationship between parent and child, such as when Junior recalled how Senior handled tax documentation of his personal trust:

Each year his accountant would come around and have me sign income tax forms that were blank. He’d make an excuse that he hadn’t had time yet to fill them out. This kept up not only through college but ten years beyond, until I was a grown man with children of my own.

How would hiding this information from a child do anything but stoke their curiosity, fear and self-criticism? Why did this practice continue on even when he was a man with his own family (at which point he had long been a part of the business in a senior role)?

While the book offered many such puzzles and glimpses into family life for the accomplished Watsons, I couldn’t help but wonder how people who had achieved such greatness in so many areas had completely neglected to resolve interpersonal emotional conflicts and instead struggled with this source of unhappiness for decades. What is family for?

 

For me, reading about the early struggles and the early attempts at growth are always the most interesting parts of a story like Thomas Watson, Jr.’s, and IBM’s in general. I found myself less interested in what it was like being Bobby Kennedy’s friend, or getting tapped for the ambassadorship in Moscow. You can look at the history of the company and of the family and think, “It could’ve been anyone else, it’s not clear what they did that was special or unique beyond being lucky” but you can’t say they didn’t work hard, or purposefully. There’s no simple recipes or formulas for success in this book when it comes to business, family or life, but there are a number of things to think about, struggles that turn out to be common to all of us, great or small in our vision or accomplishments. I think that is where the value in this book lay for me.

 

Review – Asian Godfathers (#economics, #business, #Asia, #CronyCapitalism, #HongKong)

Asian Godfathers: Money and Power in Hong Kong and Southeast Asia (buy on Amazon.com)

by Joe Studwell, published 2007

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

Studwell’s “Asian Godfathers” examines the economic development of Hong Kong, Singapore, Malaysia, Thailand, Indonesia and the Phillipines, which are “linked by powerful, unifying themes… similar historical legacies and a very particular relationship between political and economic power.” In so doing, it helps the reader understand curious facts such as how,

a small region that, concurrently, could not boast a single non-state corporation among the global top 500 [but] none the less accounted for a third of the wealthiest two dozen people on the planet.

The narrative of southeast Asia is that it is rapidly privatizing after a narrow-miss with communism and concentrated state-owned enterprise intervention throughout the 1950s, 1960s and 1970s post-war period and this explains some of the fantastic personal fortunes of various “business families” in the area. But if these supposedly privatized economies can’t boast globally competitive businesses, how are these people managing to get so rich?

The three minor inquiries of this major inquiry are (pg. xii):

  1. why have secretive tycoons come to rule the economies of southeast Asia?
  2. what have they contributed to the region’s overall economic development?
  3. why are they still so powerful when the depth and potency of the Asian Financial Crisis — an event to whose origins they were central — appeared, to many observers, to be likely to emasculate them? (It did not.)

In searching for answers, the book explores several key themes (pg. xiii):

  • historical; the southeast Asian economy is the product of a relationship between political and economic power that developed in the colonial era and was sustained, with a different cast of characters, in the post-colonial era
  • mechanical; a political elite grants to members of an economic elite monopoly concessions, normally in domestic service industries, that enable the latter to extract enormous amounts of wealth, without a requirement to generate the technological capabilities, branded corporations and productivity gains that drive sustainable economic development
  • political; it was expedient for new indigenous political leaderships to nurture their own dependent class of, typically, non-indigenous tycoons who could siphon off economic rents, give a share to their political masters and not pose a threat to political power
  • economic; instead, growth came from a combination of small-scale entrepreneurs, many concentrated and around manufacturing, and a policy of renting out the local labor force to efficient multinational exporters
  • crisis; these arrangements seemed to work acceptably well until the July 1997 onset of the financial crisis
  • repetition; most of the institutional failings revealed by the crisis have not been tackled in the decades since the crisis broke and it remains unclear whether they will be [there could be another crash, as a result]

The introduction to “Asian Godfathers” is outstanding. It is one of the best, most coherent summaries of the major arguments of a comprehensive work such as this that I have come across, so it is worth quoting extensively from it before outlining and commenting on the rest of the book.

First, why is the book called “Asian Godfathers” (pg. xiv)?

The use of the term godfather in this book aims to reflect the traditions of paternalism, male power, aloofness and mystique that are absolutely part of the Asian tycoon story… a very romanticized myth…has grown up around southeast Asia’s tycoons [along with] sub-myths about race, culture, genetics, entrepreneurialism… the entire grounding of economic progress in the region since the end of colonialism.

The Asian tycoons are not just characters in the book, they are characters in real life and they have worked hard to consciously develop their public character themselves. And with regards to character, it is interesting to note that,

Most of Asia’s godfathers are ethnic Chinese.

This would seem to fit into the “historical” theme, as during the colonial period many of the ennobled members of the business community were part of the Chinese diaspora throughout southeast Asia and their relationships with indigenous and colonial governments were similar to the roles and functions which exist today between political and economic elites in the region due to the seeming “special” status a racial or ethnic outsider can obtain in such scenarios.

That being said, Studwell objectively rejects the idea that there is a “culture-centered explanation” for the success of (mostly) Chinese tycoons in southeast Asia, founded on three points:

  1. notions of a cultural imperative ignore historical context; arbitrary decisions made by former colonial powers have led to present-day coincidences, such as the high percentage of “subcontinental ancestry” individuals serving as lawyers and judges in Singapore or Malaysia
  2. the Chinese are non-homogeneous and the Chinese in southeast Asia are typical of the Chinese race in general; Chinese emigres were a self-selected group willing to take significant risks for chances at a brighter future, and they emigrated from geographically, culturally and linguistically different regions around China at different periods of time
  3. the Chinese emigration generally can not be conflated with the godfather phenomenon; while overseas Chinese enjoy above-average incomes in some places, there are also large populations of emigre Chinese who live in poverty similar to the indigenous populations

So does this mean culture and race mean nothing in explaining southeast Asian economic outcomes? Not quite. (pg. xix)

This book argues that these individuals are above all the economic products of the political environment in which they operate and that it is this same political environment that is preventing the region from achieving sustained economic progress. In a worst-case scenario, southeast Asia may be headed towards Latin America-style stagnation and inequality.

So, again, how do these people get so rich? Essentially, they are “asset traders”, trading assets from one political system (Asia) to another (the Western world/global market economy) and they get paid for arbitraging between the two in the form of rents.

Asian godfathers exploit political inefficiency for gain… their companies’ performance in terms of productivity typically lags behind that of the overall economies in which they operate… it is the smaller scale local businesses and the hard work and thrift of ordinary southeast Asians that have driven development.

Interestingly, this is the same argument that was made about the Chinese communist party in control of coastal trading cities and the inland rural entrepreneurs who were driving economic change in China that was put forth in “Capitalism with Chinese Characteristics“. The state-connected actors get all the credit for “producing” measurable trade activity that their political obstructions necessitate, and the contribution of thrifty commercial operators in the domestic economy which are harder to measure and observe go without note despite being at the root of the phenomenon of “third world development” in these regions.

This is one of the central myths shattered by this book– that the mega-wealthy businessmen of southeast Asia are bootstrapped entrepreneurs operating in competitive markets and that Hong Kong and Singapore have grown because they are liberal, free market economies in a world of state intervention and control. The truth is almost exactly the opposite, with the individuals topping the “rich list” representing a group of crony capitalist concessionaires par excellence, and Hong Kong and Singapore in particular representing what happens when you channel large volumes of cash flow through controlled banking and finance regimes, regardless of wider economic or social principles.

This political economic arrangement is not new, and it is not even just colonial. As Studwell argues, it starts with migration pre-dating European control of the region and it relies upon an ancient

racial division of labor in which locals were the political entrepreneurs– focused on the maintenance of political power against indigenous rivals and, later, in partnership with European and American colonists — and outsiders who became economic, and as a corollary bureaucratic, entrepreneurs.

In a sense, there’s really nothing unique or extraordinary about these arrangements. From the dawn of time some groups in society have sought political control over others, which is to say, they seek to live at the expense of the productive people in society. The ancient trade economy resulted in migrant businessmen who proved to be capable administrators not only of their own affairs but also as hired tax farmers and local bureaucrats for the indigenous rulers. Over time, these two groups came more and more to rely upon one another, the businessmen on the rulers for explicit monopoly concessions in return for loyal service, and the rulers on the businessmen for a class of people who could actually get their hands dirty with revenue generation for the state while serving as convenient scapegoats or distractions for the frustrations of the local populace concerning their rule, when need be.

These political arrangements always result in poverty, suffering and gross economic inefficiency. In the case of countries where the governments overtly monopolize or nationalistically control real enterprises, there is the perennial problem of an artificially low supply resulting in artificially high prices. Combined with foreign trade controls which prevent competitive global exports from arriving in their markets, you have the set up for an extremely lucrative arrangement for these “godfather” types who bridge the gap between the inefficient, politically-controlled domestic markets and the efficient, competitive global market. The success of the “trade nations” of Hong Kong and Singapore, then, can be explained by political interference in the nearby local economies, not the absence of such interference in their own:

What is important about Hong Kong and Singapore is that they are archetypal city states — ‘port city states’ would be more precise. Since colonial inception they have offered tariff-free trade (with few or no questions asked about what is being traded) and have been places to park money (with few or no questions asked about where the money came from)… Hong Kong and Singapore perform a simple economic trick: they arbitrage the relative economic inefficiency of their hinterlands… For as long as surrounding countries have imposed tariffs or quotas on trade in their efforts to fund government, Hong Kong and Singapore have profited from circumventing those restrictions.

In the case of Hong Kong and Singapore, “Hong Kong’s immediate hinterland is Southern China… Singapore’s dominant hinterland… has long been Indonesia.” When was the last time you saw China or Indonesia show up on a list of globally competitive economies?

The reason Hong Kong and Singapore are such large financial centers, in particular, is that

Ethnic outsider tycoons who have profited from business concessions in surrounding countries have always sought to keep the funds offshore, fearing — with good reason — that they may one day be the victims of political change.

Perhaps overlooked by some,

Singapore… increased account secrecy provisions and changed trust laws in a manner designed to attract the kind of money Switzerland had dealt in… foreign private banks almost doubled between 2000 and 2006

And meanwhile, “to sustain its economy, Singapore is building casinos to attract corruption money from China.”

In conclusion, rather than proving the efficacy of free markets (which Hong Kong and Singapore largely do not have in terms of domestic industries), instead the experience of these island countries serves to prove

That a city state with a strategic deep water port in a region that has relatively higher levels of mismanagement, corruption and political uncertainty will prosper with little reference to official economic philosophy.

But what about the “godfathers” themselves? Surely they are talented businessmen in their own right despite the relatively uncompetitive markets in which they thrive?

Whether it is as a sop to the political class to help fool the local populace that it has options and opportunity, or it is a sop to their own egos to glory in a sense of achievement and capability that has not been earned, the godfathers’ public personas are men of meager means who rose through the ranks in short order to become industrial and financial titans in their adopted countries while the reality is that most came from already successful families with existing political connections that they enhanced, or, to the extent they were “penniless” before their rise, they certainly didn’t do it through hard work and sweat equity of their own but happened to be in the right place at the right time and got control of an early government concession which became the rocket engine to the top. Many godfathers of the present generation were war-time smugglers, gambling operators or even cooperators with occupying forces as southeast Asia changed hands back and forth during World War II. As Studwell observes,

whether Hong Kong has been ruled by British colonialism, Japanese imperialism or Chinese communism, it has always been managed through the same group of people.

According to one local observer and member of the monied class, “In one generation it is very difficult [to rise from rags to riches ] because it is not an open society.” And according to a local scholar, “I have yet to find a businessman who started as a coolie.” As such, the godfathers have a notorious reputation when it comes to expensive entertainment vices and

the rumors are legion and suggest a form of gambling that echoes that of Middle Eastern potentates — vast sums of money blown away by people who do not know its real value because they have not really earned it.

Nor are their social habits those of the hard-working middle-class bourgeoisie who cherish being part of their communities and maintaining stable, monogamous relationships with supportive spouses. Says one observer, “None of these people has social friends. They fuck a girl, shake off their horniness and then it’s back to work.” It appears to be the life of an addict and by another’s estimation, “If they don’t have a woman a day they can’t function.” The Asian godfathers are more Bill Clinton than Bill Gates, it seems.

Another important aspect of the godfather character is secrecy. While private businessmen are often protective of their trade secrets, customer relationships, technological know-how and tactical elements of their strategy, this is a different form of caginess. Says Studwell, “Most deals involve some element of government licensing or concession, things that both parties prefer to keep private.” The godfathers get special advantages from the government which, if known, ruin their reputations as self-made men, and the governments themselves want the mystique maintained so as to confuse the masses as to how they are controlled (and how they benefit by their arrangements with these business stars.)

And that secrecy is extremely valuable because

At the heart of the average godfather’s empire is a concession or license that gives rise to a monopoly or oligopoly activity… this non-competitive core cash flow, the river of molten gold that will keep him going through good times and bad

allows the godfathers to build their empires, and survive the inevitable setbacks and speed wobbles as uncompetitive pseudo-entrepreneurs jump head first into a bevy of unfamiliar industries and businesses and try to swim without the floaty wings of government assistance.

Though there are many such arrangements detailed in the book, the explanation of Hong Kong land development patterns on page 68 is worth quoting at length as a kind of summary of how these special arrangements serve to entrench a group of large scale crony capitalists:

The British administration set the scene for real estate oligopoly because it chose to depend heavily on land sales — all land was deemed “Crown land” until sold — to fund its budget. As Hong Kong grew in the post-Second Word War era, the government auctioned off development land in ever more expensive chunks: US$1 billion a pop for large plots by the mid 1990s. Anyone who acquired land in the secondary market that was not designated for building — agricultural acreage in the New Territories was targeted by the tycoon families behind Sun Hung Kai and Henderson in the 1970s and 1980s — had to pay a hefty upfront conversion premium before construction could begin. The effect was to rule out small players and persons without good connections to the large British banks. A government-commissioned 1996 report by Hong Kong’s Consumer Council found that three-quarters of new private residential housing was supplied by only ten developers between 1991 and 1994, and 55 per cent came from the four biggest developers. A separate look at profitability considered thirteen large residential developments. Margins were extraordinary, especially where conversion fees had been set by private tender on large lots of agricultural land. In such cases, the lowest return the Consumer Council found — as a percentage of total estimated development costs, including land — was 77 per cent. The highest was 364 per cent.

For everyone else in Hong Kong, the outsize cost of housing relative to all other living expenses is a constant complaint.

Middle class Hong Kongers, meanwhile, paid low nominal taxes but some of the world’s highest rents, or mortgage repayments, and apartment management fees equivalent to 13-15 per cent of rents.

Interestingly, Hong Kong locals see this as inevitable, not as a necessary outcome of a crony land development and ownership system, but as the necessary outcome of living on a small island! The argument is that there is only so much land, and they aren’t making more (nevermind landfill projects like the airport, ports, etc.)– somehow competition serves to lower prices in every other area of business but in Hong Kong real estate, no matter how tall you build the buildings, supply never improves and prices keep going up. They’re totally bought in on the godfather propaganda.

The whole system seems outrageous to an outsider, as Studwell describes

a graft-seeking culture among indigenous politicians. “They’re broke every week… feed your mouth, feed your prick. That is how they think.”

Yet,

while the south-east Asian system is corrupt, it is more efficient than ones that pertain in socitieies where the holders of power also seek to be exploiters of business rents.

Here he is referring to places like Africa and parts of the Middle East, but the metaphor could also be apt in looking historically at feudal Europe versus bourgeoisie Europe, where one of the primary political trends was the reduction of large landed estates into ever smaller, privately owned parcels controlled by individual land owners or small businessmen.

So, if the godfathers are not business geniuses, what are they and how do they manage to get anything done across their humongous and complicated business holdings? According to Studwell,

their activities are more like those of supercharged chairmen: setting strategy, deal making, hobnobbing, but ultimately leaving others to execute the substance as well as the detail of what they put in train

and it is their gweilo, or running dogs, who are the real business men in their organizations. Yet, even then these individuals are not as much businessmen as they are “enforcers”, with the top enforcer being more akin to “‘the chief slave’. This is the first person called when the godfather wants something done.” And these gweilo, like the godfathers themselves, are rarely members of the local populace but are instead drawn from “a globally traded management cadre” who graduate from top universities and can be found running large enterprises around the world.

The final piece of the puzzle is the godfathers’ relationship with capital markets. The first thing to note is that every godfather has his own affiliated bank, for example, “By the mid 1990s every major business [in Indonesia], and many lesser ones, had a captive bank.” Interestingly, even “different factions of the military had banks”! With control of a bank, godfathers can tap into cheap capital pools and then hand off social problems to the government in the event of a crisis such as the Asian Financial Crisis of 1997.

And while massive, cheap leverage is the favored form of financial fuel, the godfathers have also found unique ways to employ their legerdemain in the equity markets via that ever-so-wonderful technique of arbitrage. In fact, this explains the puzzling question of “why, despite heady economic growth, have long-term stock market returns in south-east Asia been so poor?” For example, Studwell notes that “Between the beginning of 1993 and the end of 2006, dollar returns in Thailand and the Philippines were actually negative; their stock markets destroyed capital.”

The answer is simple: “buying equities in south-east Asia is fundamentally about buying into the godfather business model”. And the godfather model contains the implicit query

why work hard to increase a company’s stock price and pay dividends when all the capital you need is available at a real interest rate close to zero per cent from a bank whose board you control?

From this standpoint, then, it should come as no surprise that

the eight largest conglomerates in the region exercise effective control over a quarter of all listed companies, while the top twenty-two conglomerates control one-third of listed vehicles.

What is, perhaps, surprising is how the godfathers have managed to profit even from running their listed companies into the ground. This was one of the most fascinating reveals in the book:

The game here was for tycoons to sell low-grade property assets into new corporate entities, back-load the debt repayments of the purchaser and list them with the story that dividends in year one would be a guide to future earnings.

The money used to finance this arrangement is often provided by their bank. And when the publicly-listed corporate structures verge on insolvency, the godfather’s private companies offer to repurchase the assets at pennies on the dollar. It is an outstanding bait-and-switch which allows them to swipe millions (billions?) along the way formerly belonging to “dumb money” mutual funds. In many instances of these IPO-to-privatize shenanigans “the boss himself would own only about 10 per cent of what he was selling, a powerful signal that the asset was overpriced.”

The 1990s leading up to the Asian Financial Crisis represented a kind of Golden Era of banking charlatanry for the godfathers where “Hong Kong, for instance, had negative real interest rates from the end of 1990 to the start of 1995”, which allowed for such inanities that “K. S. Lo, the real estate tycoon and elder brother of Vincent Lo, [telling a CSLA analyst] he would buy any property in Hong Kong sight unseen.” If that kind of anecdote isn’t revealing of the reality of the free market, competitive real estate economy in Hong Kong, nothing is.

Studwell has produced an outstanding and deeply-researched resource in “Asian Godfathers.” While my review focused on Hong Kong and Singapore, which are of particular interest to me personally, there is just as much detail here about Malaysia, Indonesia, Thailand and the Phillipines, as well as a variety of throwaway lines that come out of the mouths of the main characters and those forced to bask in their wake alike that are just too funny not to chuckle about. The great detail with which Studwell describes the machinations of the godfathers and the mass of damning evidence he provides that they not only do not operate in free economies but only exist because of the nature of southeast Asian government manipulation of regional economies is deeply satisfying to this reader and I am sure it will be refreshing to other curious minds as well.

This book is not a classic that can be read again and again with new insights about the human condition to appreciate every time, but it is an outstanding treatment in its specific area that I would strongly recommend to anybody curious to know more about southeast Asian political economy in general, and how crony capitalism works specifically, not just in these economies but around the globe because the formula is similar, if not identical. There are only so many ways to rip people off and it turns out it doesn’t require too much creativity. I plan to purchase and read a copy of Studwell’s How Asia Works in the future, and I am also considering a few other titles selected from his extensive bibliography, including:

Review – What Makes Sammy Run? (#fiction)

What Makes Sammy Run? (buy on Amazon.com)

by Budd Schulberg, published 1941

A “valueprax” review always serves two purposes: to inform the reader, and to remind the writer. Find more reviews by visiting the Virtual Library.

What Makes Sammy Run? (WMSR) is a work of fiction and judging by the title, you’d think the book is about Sammy Glick, the eponymous antagonist. Certainly that is what many reviewers, readers and critics seem to focus on. But WMSR isn’t about Sammy– it’s about the people around him, who tolerate and even tacitly support him, who enable his antics in various ways and thereby lower themselves in the process. WMSR isn’t a study in lite social tyranny, as some think, but rather it is a study in the Stockholm Syndrome. The real villain in this novel is the narrator, the despicable Al Manheim.

It’s easy to be fooled. Sammy isn’t a “nice person” and he clearly isn’t a “happy person.” He’s a wildly imbalanced person with a humongous ambition and not much else of note. He isn’t necessarily handsome or well-spoken. He isn’t an intellectual. He certainly doesn’t have any charm, or empathy for others. It’s easy to dislike him and it’s easy to watch him tread over other people on his way up and make the mistake of thinking he’s the bad guy.

But the question we must always ask ourselves in a tale of moral depravity is, “Where’s the hero, and what is he up to?” Who is keeping this guy in check? Who is going to stop him. In WMSR, the answer is “There isn’t one.” So the people who bear the responsibility for Sammy’s reign are all those who could be the hero and stop him, but don’t, or worse, those who claim to find him distasteful but end up worshipping him.

The best example of worshipping the supposed bad guy in the book is the way Al Manheim falls in love with Kit, a woman who admits to a one-time sexual relationship with Sammy Glick because of her burning curiosity to know what it’d be like to have all of his ambition and energy inside of her. She’s supposed to be the strong, principled and competent femme of the novel yet she couldn’t resist her own base sexual craving for a man she knew was no good. And rather than keep her at arm’s distance, Manheim becomes a soppy wet romantic for her. This is what you call “selling out.”

Sammy’s rise to the top in Hollywood despite having no talent, no money, no experience and no real value to anyone for anything is supposed to serve as a condemnation of the industry and maybe tangentially of the voluntary, for-profit capitalist economy itself. We’re supposed to read WMSR and look around us at all the entitled pricks like him who are our bosses, our owners or are actively in the process of clawing their way to such heights and smirk or despise them. “You’re just another Sammy Glick!” But why then do people secretly admire and envy them and their achievement-less achievement?

The answer is that the Al Manheim’s of the world have no self-esteem. They don’t love themselves enough to say “This is wrong!” on the many occasions they have to say such things. They don’t admire themselves enough to ignore the nuisance Sammy’s, to resist their endless persistence, to insist in return that they go ply their filth somewhere, anywhere but here. Instead, they open the city gates, invite them in and grab them a footstool so they can be comfortable as they bark out their orders. Then, like Al, they drink or smoke or ingest their minds into oblivion when the pressure of thinking about what they’ve done gets too great.

In other words, they’re weak.

Sometimes, they’re so weak, like Al Manheim, that they become accomplices to the madness. Like Nick Carraway, they’re happy to stand silently on the sidelines and observe and oogle as long as they can have the feeling that they’re in on the big adventure, as horrible as they think it may be.

And like Jay Gatsby, the Sammy Glick’s all have a pitiable background. They come from a world without love and so they can’t imagine a world with it. They’re not human, choosing, conscious entities. That experience of life was stripped from them at birth when they entered their perceived loveless world. All they can do is march to their idiot tune and destroy a bit of the world along the way to their doom.

Only they wouldn’t get very far, if it weren’t for the Al Manheims and the Nick Carraways.

The answer to the question What Makes Sammy Run? is less interesting than you hope. It’s so simple, it’s almost stupid– he has no love. It’s also somewhat pathetic because it can’t be helped. Sammy is damaged goods and no amount of therapy or intervention can get him back. The great irony of the novel, of any Sammy Glick, is that someone, somewhere served as the Great Enabler by bringing them into the world and nurturing them long enough to develop their skewed sense of possibility. From there, they’re working on auto-pilot.

A far more interesting question is What Makes Al Go Along With It?, especially when He Says He Hates Him.

Or, something I was thinking about last week, What Makes Davey Crawl? “Davey” is a small business owner, responsible for a few dozen people, who has managed to slowly run into the ground over a period of decades what could be a valuable little enterprise. There are the Sammy’s out there, deterministically trying to skitter to the top without adding anything of value, and then there are the Davey’s just trying to hold on and desperately, desperately disinterested in doing any better.

Why? Why is Davey happy without his ambition (is he happy?) when Sammy is miserable (to himself and others) with his? Sammy wants to wrap his whole mouth around the hose so there isn’t any for anyone else, but Davey just doesn’t want to turn it on all the way when there could be plenty more.

The answer is probably similarly simple, stupid and hopeless to fix. We may just have to suffer these Sammys, these Daveys and these Als as best we can.

If Yelp Could Be Yelp’d (@yelp, @itsa_talia, #TablesHaveTurned)

A young woman who used to work at Yelp wrote “An Open Letter To My CEO” complaining about her life challenges and how she sees them as caused by her company’s inability to compensate her as she wishes. She was fired by the company shortly afterward.

I don’t think I need to comment on her “open letter” or her firing. There are a whole lot of people hitting it from every angle already and I don’t think I can improve the effort.

What I did think of as I read about this situation, however, is how funny it would be if Yelp had it’s own Yelp page. Now, Yelp is set up so that customers of businesses can rate and comment on their experience at that business. It would be innovative, but inappropriate, for an employee of that business to write a review– that isn’t really what Yelp is for.

That being said, I can imagine what this young woman’s Yelp review might’ve looked like and, as the operator of a business that has seen its fair share of Yelp-crazies leaving nasty, unreasonable reviews, I believe it would sound something like this:

Name: Jane T.

Rating — X x x x x (1 star)

Comment — What a joke of a company. I’d give them negative 5 stars if I could!!! Where do I even begin? I am a college-graduate with a degree in English and dreams of making it big in media. I joined this company at a low-level position where I’d have to work with customers and answer phones because I got suckered by the hype and believed this company actually cared about people… which they DON’T!! I took on all kinds of debt and started a long commute only to find out that I wouldn’t be getting promoted like the company practically promised I would be so now I am stuck while the CEO makes $300 million acquisitions like money is no object.

First of all, I have to eat nothing but rice every single day. Yeah, some people voluntarily eat nothing but rice when they go through weird eating phases in high school and college, but they CHOOSE to do that. For me this is not a choice and it’s truly unbearable. Secondly, just when I thought it couldn’t get any WORSE, I made a bunch of recommendations to the company on how they could volunteer their time and nobody listened to me! It’s like they don’t even know I have a college degree!! What does it say about a company when the suggestions of lower-level new recruits aren’t immediately adopted as part of corporate strategy?

Every single person I’ve complained to has basically ignored me. I don’t think this company is setting a good example of good customer service by treating me and my complaints about this company and how unjust everything is like it’s MY problem.

To anyone reading this thinking about getting off welfare and getting a productive job at this company, STAY AWAY. This is the worst possible company in the world to work for I don’t know how anyone puts up with this. I bet no one will even read this because this company could care LESS about its employees and how much they suffer, I should just quit!!

[Yelp Business portal review note: The user has requested that the business NOT contact them.]

Reply from Yelp – Jeremy Stoppelman:

Hi Jane T.,

We are so sorry to hear about the frustrations you’ve had as an employee at Yelp.

“We’re passionate about connecting people with great local businesses. At Yelp, we’re bringing together world-class talent from different experiences, disciplines and areas of study to produce a world-class product.” It sounds like you have a lot of talent and we appreciate you wanting to share that with the company.

“We believe in giving our employees the tools and resources to keep them healthy, wealthy and wise. Whether it’s a gym subsidy, unlimited snacks or healthcare benefits, we believe happy employees are successful employees.” We believe our benefits package is competitive based on what is available within and without our industry but we understand you didn’t see it that way.

“Yelp employees live, work and play in five-star cities throughout the United States and Europe.” It’s true that some of these cities can be a bit pricey to live in!

By the way, we looked up your name in our HR database and we couldn’t find a “Jane T.” Do you work for our company? We are wondering if maybe you meant to post this review somewhere else?

Anyway, we are sincerely sorry to see your experience hasn’t lived up to your expectations so far, but we do hope you’ll take the time to get in touch with us personally so we can resolve your concerns fully. We’ll take your concerns into consideration as we look to further improve our service and employee offerings in the future.

Sincerely,

Jeremy Stoppelman

CEO, Yelp

“Start living your five-star career at Yelp”

Updated review, rating Xxxx (1 star):

Well, they fired me. If that doesn’t prove what a bunch of incompetent losers these people are, I don’t know what does. I could’ve been a really valuable employee for this company if they had treated me right but they made it clear I don’t matter to them. From the CEO down, it just makes me want to puke it’s so unfair!