Bobo has decided to tell us all about “The Evolution of Trust.” He gurgles that the evolution to more frugal, deinstitutionalized living that has created the sharing economy may also lead to less involvement of government in everyday life. Following his POS I’ll quote “Matthew Carnicelli” from Brooklyn’s entire comment, which begins with “David, you can’t be serious.” Mr. Cohen, in “The Socialist World Cup,” says in Brazil, the culture of the group vanquishes the money culture of the superstar. In “From 9/11 to BP to G.M.” Mr. Nocera says Kenneth Feinberg is proving that you can compensate victims without litigation. Mr. Bruni has a question in “A Grope and a Shrug:” With American Apparel’s sexually audacious founder and other prominent men, do we excuse the inexcusable? Here’s Bobo:
I’m one of those people who thought Airbnb would never work. I thought people would never rent out space in their homes to near strangers. But I was clearly wrong. Eleven million travelers have stayed in Airbnb destinations, according to data shared by the company. Roughly 550,000 homes are now being shared by hosts. Airbnb is more popular in Europe than it is even in the United States. Paris is the largest destination city.
And Airbnb is only a piece of the peer-to-peer economy. People are renting out their cars to people they don’t know, dropping off their pets with people they don’t know, renting power tools to people they don’t know.
In retrospect, I underestimated the power of a few trends that make the peer-to-peer economy possible. First, I underestimated the effects of middle-class stagnation. With wages flat and families squeezed, many people have to return to the boardinghouse model of yesteryear. They have to rent out rooms to cover their mortgage or rent.
Second, I underestimated the power that liberal arts majors would have on the economy. Millions of people have finished college with a hunger for travel and local contact, but without much money. They would rather stay in spare rooms in residential neighborhoods than in homogenized hotels in commercial areas, especially if they get to have breakfast with the hosts in the morning.
And the big thing I underestimated was the transformation of social trust. In primitive economies, people traded mostly with members of their village and community. Trust was face to face. Then, in the mass economy we’ve been used to, people bought from large and stable corporate brands, whose behavior was made more reliable by government regulation.
But now there is a new trust calculus, powered by both social and economic forces. Socially, we have large numbers of people living loose unstructured lives, mostly in the 10 years after leaving college and in the 10 years after retirement.
These people often live alone or with short-time roommates, outside big institutional structures, like universities, corporations or the settled living of family life. They become very fast and fluid in how they make social connections. They become accustomed to instant intimacy, or at least fast pseudo-intimacy. People are both hungrier for human contact and more tolerant of easy-come-easy-go fluid relationships.
Economically, there are many more people working as freelancers. These people are more individualistic in how they earn money. They often don’t go to an office. They have traded dependence on big organizational systems for dependence on people they can talk to and negotiate arrangements with directly. They become accustomed to flexible ad-hoc arrangements.
The result is a personalistic culture in which people have actively lost trust in big institutions. Strangers don’t seem especially risky by comparison. This is fertile ground for peer-to-peer commerce.
Companies like Airbnb establish trust through ratings mechanisms. Their clients are already adept at evaluating each other on the basis of each other’s Facebook pages. People in the Airbnb economy don’t have the option of trusting each other on the basis of institutional affiliations, so they do it on the basis of online signaling and peer evaluations. Online ratings follow you everywhere, so people have an incentive to act in ways that will buff their online reputation.
As companies like Airbnb, Lyft and Sidecar get more mature, they also spend more money policing their own marketplace. They hire teams to hunt out fraud. They screen suppliers. They look for bad apples who might ruin the experience.
The one thing the peer-to-peer economy has not relied on much so far is government regulation. The people who use these companies may be mostly political progressives, but they are operating in a lightly regulated economic space. They vote left, but click right.
As this sector matures, government is getting more involved. City officials have clashed with Airbnb and Uber on a range of issues. But most city governments don’t seem inclined to demand tight regulations and oversight. Centralized agencies don’t know what to make of decentralized trust networks. Moreover, in most cities people seem to understand this is a less formal economy and caveat emptor rules to a greater degree.
Meanwhile, companies like Airbnb and even Uber seem inclined to compromise and play nice with city governments. They’re trying to establish reputations as good citizens, to play nice with bureaucrats and co-op boards; they can’t do that with in-your-face, disruptive tactics.
We’re probably entering a world in which some sectors, like energy, retain top-down regulatory regimes. Other sectors, like bake sales, are unregulated. But more sectors, like peer-to-peer, exist in a gray zone in between.
As mechanisms to establish private trust become more efficient, government plays a smaller role.
And now here’s the comment from “Matthew Carnicelli” from Brooklyn, which deserves to be read in its entirety: “David, you can’t be serious. Why do you suppose it is that this peer-to-peer networking phenomenon has grown – and that more Americans are today working as freelancers? Are you seriously alleging that it is voluntary? Isn’t it more likely that most Americans (and Europeans, for that matter), in the aftermath of the World Financial Crisis and the meager recovery that the austerity hawks refused to fund, are so financially strapped that they have had to make other arrangements, do whatever it took to keep a roof over their heads? David, speaking of ratings mechanisms, if the Times allowed your readership to rate your columns, do you imagine you would get more 1-star or 5-star ratings? My money would be on a predominance of 1-star ratings. You’d be like the restaurant on Yelp that no consumer would ever willingly visit.” Ain’t that the truth… Now here’s Mr. Cohen, writing from Paris:
Money talks in global soccer, as it does everywhere else, perhaps more so. The sport is big business. The likes of Lionel Messi, Cristiano Ronaldo and Neymar are international brands, as recognizable as any Hollywood star. Compare a club’s wage bill to its success rate: the correlation is overwhelming. When billionaires acquire clubs like Paris Saint-Germain, Manchester City or Chelsea, their fortunes change. When a very rich country like Qatar wants to host the World Cup, it gets its way even if entirely unsuited to the undertaking.
All this often undermines the beauty of the game. Sulky and overpaid stars, dubious deals and rapacious players’ agents are now part of the scenery. Football has been no exception to the inexorable process that sees the authentic and the genuine undermined by big money and manufactured images.
Until along came Diego Simeone and his “socialist football.” Think of him as the Thomas Piketty of the soccer world. It is impossible to understand what has been happening at the remarkable World Cup in Brazil without considering his impact.
Simeone, an Argentine, is the manager of the Spanish club Atlético Madrid that, against all the odds and all I have described above, won La Liga (the Spanish league title) this year, triumphing over Barcelona (home to Messi and Neymar) and Real Madrid (home to Ronaldo). Here, the normally reliable wage-bill indicator of success broke down. Atlético’s players earned a fraction of the salaries of their illustrious rivals.
What Atlético had was unity, cohesion, determination, energy and self-belief. The culture of the group vanquished the culture of the superstar. Simeone spoke with pride of his working-class side in a Spain of massive youth unemployment. “We see ourselves reflected in society, in people who have to fight,” he said. “People identify with us. We’re a source of hope.”
Every trend produces its countertrend. Soccer is no exception. This World Cup has not been about the stars, for all the brilliance of Neymar and Messi. It has been about unsung teams in the Atlético mold playing an intense, cohesive, never-say-die game. Their constant pressing has sent the likes of England, Italy, Spain and Ronaldo’s Portugal home, while giving Brazil and the Netherlands a real scare. I am thinking of Costa Rica (now in the last eight), Chile (very unlucky to lose to Brazil in a penalty shootout), Mexico (cheated of a deserved victory in the last minutes by the Dutch) and, in its own way, Jurgen Klinsmann’s gritty United States.
Here in France, whose team only just qualified for the World Cup, there has been much talk of how victories have stemmed from the absence of its stars. Franck Ribéry, a brilliant winger, was injured, and Samir Nasri, a wonderfully creative playmaker and goal scorer, was omitted because he was deemed a troublemaker. (France had a disastrous last World Cup campaign in South Africa that collapsed with players in open revolt.)
The result of their absence has been a more “socialist” French side with many good players but no stars, and a tough work ethic in the image of midfielder Blaise Matuidi. Intense tempo and cohesion have produced improved results. (I write as France prepares to play Nigeria in the Round of 16, a game that will test its true caliber).
France has already scored eight goals in three matches in the image of a World Cup that, before the quarterfinal stage is reached, has seen as many goals (145 as I write) scored as in the entire South African World Cup. This reflects a changed game. In every area there has been a reaction: refereeing (less restrictive, more inclined to let matches flow); style (more attack-minded, less cautious); and teamwork (the ascendancy of the high-tempo, all-for-one Simeone model).
I doubt that Ann Coulter, the conservative American commentator, had heard of Simeone’s “socialist football” when she recently lamented the “moral decay” she sees in Americans’ growing interest in soccer. Still, it was intriguing that she saw a liberal agenda being pushed by a sport in which “individual achievement is not a big factor” and “there are no heroes.” Like an idiot-savant who stumbles on a grain of truth through total ignorance, she was onto something. This is the anti-individual World Cup.
(Coulter fails to see that soccer is growing in popularity in the United States because the national team keeps getting better, Hispanics now make up 17 percent of the U.S. population, and America is getting globalized just like everywhere else. America’s core strength is constant reinvention, in part through immigration; soccer’s surge is no sign of weakness.)
Of course, multimillion-dollar bids from billionaire-owned clubs for the best of Simeone’s socialist stars are about to unstitch the Atlético team; Simeone himself may be lured elsewhere by some fat contract. Money will go on talking. But before it does, enjoy this revolutionary World Cup and the hope it embodies.
Next up we have Mr. Nocera:
The title of Kenneth Feinberg’s 2012 book is: “Who Gets What: Fair Compensation After Tragedy and Financial Upheaval.” It is part memoir and part meditation on some of the well-known compensation systems he has administered during the course of his career, from the Agent Orange settlement to the 9/11 fund to the Gulf coast compensation fund that Feinberg managed for BP. “Where is it written,” he muses at one point, “that the tort system, and the tort system alone, must be the guiding force in determining who gets what?” It’s a good question.
On Monday morning, however, Feinberg unveiled his latest effort, a new fund, proposed and paid for by General Motors, to compensate victims of its ignition-switch failures with the Chevy Cobalt, the Saturn Ion and several other G.M. cars. It is very much tied to the tort system, as Feinberg was quick to concede when I spoke to him Monday afternoon. The family of a married father of two who had a $50,000-a-year job — and who died in an ignition-switch accident — would potentially get several million dollars more than, say, the family of an unmarried, out-of-work 29-year-old. An investment banker who was seriously injured would get more than a laborer who was seriously injured because the investment banker’s potential earnings were higher than the laborer’s. That may not necessarily be fair, but it is the calculation that courts use to compensate people in the tort system.
There is a reason that the G.M. compensation fund is set up to replicate the tort system, of course. Like the 9/11 fund and the BP fund before it, the General Motors fund has as one of its primary goals to keep victims from filing lawsuits. Indeed, the quid pro quo is quite explicit: After Feinberg and his staff have made an offer in an ignition-switch case, the victim has to be willing to sign a document saying he or she won’t sue to get the money. There is no cap on the total amount of money G.M. has agreed to spend on victims’ payments.
“It is designed to help claimants,” Feinberg said flatly. “It is not designed to punish G.M.”
Although the fund will pay some money for pain and suffering, punitive damages are not part of the equation. Claimants — and their lawyers — seeking “punis” will have to forego Feinberg’s offer of compensation and take their chances in court.
The fund has other features that have become associated with a Feinberg-run fund. On the one hand, it is probably overly generous to certain classes of claimants. “Contributory negligence” — that is drivers who were drinking, say, when they got into an ignition switch accident — will not be a factor in Feinberg’s calculations. People with minor scrapes that required a trip to the emergency room will get some money.
On the other hand, Feinberg isn’t just giving out cash willy-nilly. He is going to require documentation that the ignition switch was the “proximate cause” of the accident. I remember once asking Feinberg why he insisted on such rigor when he was handing out BP’s money. He told me that “if the process has no integrity, then people will begin to question the legitimacy of this alternative to the court system.”
The other thing about these funds is that they work. Some 97 percent of the families of 9/11 victims opted into that fund, according to Feinberg; the number for BP fund was 92 percent — this despite the best effort of some plaintiffs’ lawyers to undermine it.
In his book, Feinberg says that he thinks funds like the one established by BP should be rare because they set up “special rules for a select few.” He adds that “the American legal system, with its emphasis on judges, juries and lawyers all participating in adversarial give-and-take, works well in the great majority of cases.”
But I think the country would be better served if they became more frequent. Compensating people while keeping them out of the tort system is a worthy goal. For one thing, such funds can serve as a kind of public atonement for a company, as is the case with General Motors. For another, courts can be a crapshoot. Finally, these funds can pay people quickly, without years of litigation and the anxiety it brings.
“Money is a pretty poor substitute for loss,” said Feinberg toward the end of his prepared remarks on Monday morning. He noted that the millions of dollars he is about to parcel out to ignition-switch victims and their families won’t bring back loved ones, or give a permanently injured person back his or her health.
In “Who Gets What,” he also points out that other cultures have different ways of offering compensation, and it often doesn’t involve money. “It is,” he concluded, “the limit of what we can do.”
It is also the American way.
And last up this morning is Mr. Bruni:
It was fully a decade ago that Dov Charney, the founder and (at that point) chief executive of American Apparel, decided that the right way to behave in front of a female journalist doing a profile of him was to masturbate. Not once, mind you. “Eight or so times,” according to the story, in Jane magazine, which is no longer around.
A year or so later a string of sexual harassment lawsuits against him began, and in a deposition released in 2006, he defended a sexist slur as “an endearing term,” saying, “There are some of us that love sluts.” Onward he marched as the company’s C.E.O.
He survived revelations that he liked to strut around the office in his underwear, an image that “Saturday Night Live” spoofed in a 2008 skit. He survived public references to women as “chicks” with big or small breasts.
He even survived a determination by the Equal Employment Opportunity Commission in 2010 that American Apparel had discriminated against women “by subjecting them to sexual harassment.”
It wasn’t until two weeks ago that the company’s board of directors finally gave him the boot. To review his record is to be floored and outraged that it took so long.
But that’s different from being surprised.
Charney’s story provides a familiar example of how, at least with men, we fail to distinguish sexual peccadilloes from sexual predation, lechery from hostility, chalking up the latter as the former and seeing all of it in one big, forgiving blur of testosterone.
His ouster at American Apparel happened, interestingly, around the same time that the photographer Terry Richardson came under fresh scrutiny for accusations of sexual abuse and intimidation that go back many years and were brushed aside as his edgy legend in the fashion world flourished.
The two cases are reminders and alarms. Across a spectrum of occupations, there has often been an acceptance of the most driven and dynamic men as the messiest ones, possessing unwieldy appetites, pockets of madness, streaks of cruelty or all of the above. Boys will be boys and great men will be monsters, including to women. Too readily, we shrug.
Or we figure that a certain macho bravado is the key to their accomplishments and that certain lusts come with it — and won’t always be prudently channeled.
That was many Americans’ spoken or unspoken attitude toward Bill Clinton, whose sexual behavior persistently threatened to be, or was, disruptive. His interest in seduction, prized in the political arena, couldn’t be switched off when he retreated behind closed doors. It was part of the charismatic bargain.
Under the constant gaze of a twitchy media, politicians have at least tried to be more careful since. And following the Clarence Thomas and Bob Packwood hearings in the 1990s, there are clearer formal rules about how men should and shouldn’t engage women in the workplace.
But it’s astonishing how blind they can still be. I know male journalists who covered the humiliation and downfall of politicians like Packwood and nonetheless proceeded to crack lewd jokes or make crude remarks to female colleagues. When some other guy does that, he’s a creep. When you do it, it’s fun, flirty and maybe even appreciated. The male ego is a wondrous instrument of self-delusion.
Charney’s in particular. A video of him prancing around naked that appeared on the Internet two months ago suggests just how besotted with every last inch of himself he is.
For as long as he was making oodles of money, business associates were besotted with him, too, no matter his misdeeds, which they saw — sickeningly — as part of some erotically charged mystique.
“That Jane article put him on the map,” Ilse Metchek, the president of the California Fashion Association, told Laura Holson of The Times back in 2011. “What is American Apparel without sex?”
A year earlier, a profile of Charney in a Canadian newspaper noted that he had been “so colorful and infuriating that those qualities alone seem to have elevated the company’s profile.” Future masters of the universe, take note. You can masturbate your way to the top. Onanism is a career strategy.
Sure, certain professions are more tolerant of acting out. But I fear that not just in fashion, art and entertainment but in Silicon Valley and other precincts, there’s a conflation of artistry and eccentricity — and of eccentricity and abuse — that sometimes excuses inexcusable conduct.
Does the premium that we place on boldness and boundary-flouting provocateurs create a tension between our entrepreneurial and moral cultures? It needn’t and shouldn’t, not if we’re honest and vigilant about lines that are nonnegotiable.
Charney crossed them, and when American Apparel looked golden, his associates looked the other way. Only when its luster dimmed and his genius was called into question did they see him for what he’d always been.