Archive for the ‘Nocera’ Category

Cohen and Nocera

July 22, 2014

Bobo and Bruni are off today.  In “The Suns of August” Mr. Cohen says bodies rot, looters roam, and the Russian-enabled downing of Flight 17 marks the nadir of the West.  Mr. Nocera has a question:  “Did Dodd-Frank Work?”  He says we really have no way of knowing whether “too big to fail” is still with us until we have another crisis.  Here’s Mr. Cohen:

A century on from World War I, nobody wants the guns of August.

Yet it must be asked if waiting years for the evasive conclusions of an official investigation into the fate of Malaysia Airlines Flight 17 is better than acting now on what we already know: That the Boeing 777 with 298 people on board was shot down by a missile from a Russian-made SA-11 antiaircraft system fired from an area of eastern Ukraine controlled by Russian-backed separatists, Russian mercenaries and Russian agents. A half-drunk Ukrainian peasant with a 1950s-era rifle doesn’t shoot down a plane at 33,000 feet.

An “enormous amount of evidence,” in Secretary of State John Kerry’s words, points to Russian provision of SA-11 systems and training. The Ukrainian government has damning audio and images that capture the crime. In June, a Ukrainian cargo plane landing in the area was hit with shoulder-fired missiles, killing 49 people. This month, another cargo plane flying at 22,000 feet was hit by a missile. Rocket science is not required.

President Vladimir Putin of Russia has been playing with fire. His irredentism has made him a hero in Russia. It has endangered the world. Crimea was the swaggering precedent to this crime. The shooting down of Malaysia Airlines Flight 17 amounts to an act of war. It was impromptu perhaps, but still. Dutch corpses have rained down on the sunflowers and cornfields of eastern Ukraine, to be defiled even in death, 193 innocent Dutch souls dishonored by the thugs of the Donetsk People’s Republic.

“This is murder, mass murder. Let’s call it what it is,” said Julian Lindley-French, a defense analyst who lives in the small Dutch village of Alphen. “Shock is turning to anger here,” he told me, “and that anger will resonate in the coming weeks. This is the beginning of a period of complex torture for the Netherlands.”

The Dutch response has been of tip-toeing deference to Moscow. As for the European Union, it has been near-nonexistent. When crisis comes, Europe vanishes — the ghost that slithers away. The West has become an empty notion. The Dutch trade a lot with Russia. Europe floats along in a bubble of quasi pacifism. Better to be bullied than belligerent. Nobody wants the guns of August.

“Swift recovery of the victims’ remains is now an absolute necessity and our highest priority,” Mark Rutte, the Dutch prime minister, said in a statement. “I am shocked by the images of completely disrespectful behavior at this tragic place.” He spoke to Putin to express his outrage.

That was pretty much it. Bodies rot in the sun for four days. They are stashed in plastic bags in refrigerated railroad cars at a fly-infested station before finally moving. The black box is a fungible bargaining chip. Louts go looting. It’s a free-for-all! Official investigation teams are barred at the perimeter. Putin spins implausible yarns robed in ghastly official formulas. His plausible deniability is utterly implausible.

A Dutch writer, Sidney Vollmer, addressed a bitter letter to Rutte thanking him for preserving the moral high ground of the Dutch, for “not rushing in for a bunch of rotting corpses” as “their wallets and iPhones make it all the way” to Moscow. The corpses, anyway, “will vanish into the fog of war” and, as everyone knows, “we need Gazprom.”

Dutch passivity has a name: the Srebrenica syndrome. It is becoming the Europe syndrome.

This mass murder is an outrage that should not stand. Falling military budgets have reduced the Dutch special forces to a paltry remnant. Russia would veto any United Nations Security Council Resolution authorizing force for a limited mission to recover the bodies and the evidence. But Ukraine, on whose territory the debris and dead lie, would support it. The American, British, Dutch and Australian governments should set an ultimatum backed by the credible threat of force demanding unfettered access to the site. Putin’s Russia must not be permitted to host the 2018 World Cup. A Western priority must be to transform the Ukrainian army into a credible force.

It won’t happen. Europe is weak. Obama’s America is about retrenchment, not resolve. Putin must be appeased. Nobody is about to call his bluff. The Putin-pacifiers have many arguments. Send forces into Ukraine and you prove the Russian argument that the West has designs on it. Besides, who wants World War III?

The self-styled Donetsk People’s Republic stares down Mark Rutte. The deathly poppy fields of 1914 give way to the deathly sunflower fields of 2014. Dutch flowers wing around the globe, still, a thriving trade.

A reader, Katherine Holden, sent me a poem called “The Flowering of Death.” She writes: “Velvet leaves and sturdy stems transient graves for children mothers lovers doctors teachers fathers students artists siblings seekers fallen from the darkening sky. Flesh-fed rain.”

Everyone wants the suns of August. Summer vacations rule. Nobody wants the guns — and damn the bigger guns appeasement may bring.

This article was updated to reflect news developments.

Yeah.  Let’s rattle the sabers and swing our dicks.  That will be helpful…  Here’s Mr. Nocera:

Ralph Nader has written a new book, entitled “Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.” If you spend any time looking into the current state of affairs with the Dodd-Frank Act — Monday was the fourth anniversary of the law enacted to ensure that the country never suffers through another financial crisis like the one in 2008 — you’d have to say that he has a point.

There are many aspects of the law on which Democrats and Republicans disagree. But there is one area in which the two sides are largely in agreement: “Too Big to Fail” is still with us.

“In no way, shape or form does the Dodd-Frank Act end too big to fail,” said Representative Jeb Hensarling, the Texas Republican who is chairman of the House Financial Services Committee.

“The chances of another financial crisis will remain unacceptably high as long as there are financial institutions that are ‘too big to fail,’ ” wrote Senator Elizabeth Warren, a Massachusetts Democrat, in an opinion article she co-wrote with, among others, Republican Senator John McCain.

Dodd-Frank, of course, was supposed to end “Too Big to Fail,” the catchphrase for a financial institution whose collapse had the potential to bring down the entire financial system. That prospect is why, less than a month after the bankruptcy of Lehman Brothers, the government handed billions of dollars to the big banks to help stabilize them.

In some ways, eliminating the possibility of future bank bailouts was the whole point of Dodd-Frank. Partly this was for populist reasons: Americans were outraged that the banks were bailed out, while the country got the worst of the Great Recession.

But it was also just good public policy. Karen Petrou, the managing partner of Federal Financial Analytics, told me that if the too-big-to-fail provisions in the law worked, “the rest of the law wouldn’t matter that much because the market would discipline the institutions.” But, she added, “I don’t think the Federal Reserve or the F.D.I.C.” — the Federal Deposit Insurance Corporation — “is prepared to handle a systemic crisis for one of the big banks.”

To be sure, the Treasury Department insists that the days of “Too Big to Fail” are over. In a recent speech, Mary John Miller, the Treasury’s undersecretary for domestic finance, said, “No financial institution, regardless of its size, will be bailed out by taxpayers again.” She added, “Shareholders of failed companies will be wiped out; creditors will absorb losses; culpable management will not be retained and may have their compensation clawed back.” But the markets don’t believe it, and neither do most people who pay attention to Dodd-Frank.

There are two essential problems. The first is that it is hard to imagine that the government wouldn’t blink, as it did in 2008. “Does anyone really believe that if any of the big banks were about to go down, that the government would allow that to happen?” asked Dean Baker, a co-founder of the progressive Center for Economic and Policy Research. “No.”

The second problem is that it is difficult to envision how the law itself would “resolve” these institutions. In one part of Dodd-Frank, the banks are required to write “living wills,” laying out how they could wind down without causing a financial catastrophe. Although they are now on their third round of living wills, the documents are thousands of pages, and the government hasn’t yet told them whether the second round of living wills, filed a year or so ago, passed muster.

The law also says that if the regulators find the living wills too unwieldy and difficult to execute, it can force banks and financial institutions to shed assets and simplify their structures to make them easier to wind down. Warren and other lawmakers have pointed to this provision as something that could — if regulators pushed for it — force the banks to look more like they did pre-deregulation: with a division between commercial banks and investment banks.

Meanwhile, there is another part of Dodd-Frank that calls for banks to wind down through a process called orderly liquidation. In this scenario, the government puts the functioning parts of the bank into a new “bridge financial company,” and forces the private sector — shareholders, certain creditors, even assessments on other financial institutions if it comes to that — to take losses. Although the Treasury Department insists that the law forbids public money from being used, there are a lot of economists who have a hard time believing that taxpayer money would not somehow be used if things got really bad.

One person who does believe is Sheila Bair, the former chairwoman of the F.D.I.C. “I do think they could handle a big bank failure,” she told me. “It would be messy and difficult, but they could do it.”

Which is the ultimate problem: We have no way of knowing whether “too big to fail” still exists until we have another crisis. Let’s just hope we don’t have to find out anytime soon.

Nocera, solo

July 19, 2014

Ms. Collins is off today, so Mr. Nocera has the place to himself.  In “The $300,000 Drug” he says a miracle cystic fibrosis treatment carries a heavy price.  Here he is:

Kalydeco is truly a wonder drug.

Developed by Vertex Pharmaceuticals, it is the first drug that attacks not just the symptoms but the underlying cause of cystic fibrosis, a genetic lung disease that usually kills victims by the time they reach their 40s. It doesn’t work for every sufferer of the disease, but rather for a small subset — probably around 2,000 people — who have a specific genetic mutation that the drug targets. But for those it helps, it is life changing.

“I still pinch myself every day,” says Emily Schaller, 32, who has been taking the drug since she participated in its Phase III trials five years ago. “I can take deep breaths. I can run without coughing.”

Two years ago, as it was coming to market, Dr. Margaret Hamburg, the head of the Food and Drug Administration, described Kalydeco an “an excellent example of the promise of personalized medicine.” Personalized medicine describes drugs that treat so-called orphan diseases — that is, diseases with a small population — or subsets of people with broader diseases. This kind of targeted medicine has been the Holy Grail ever since the genome was first sequenced about a decade ago. Now it is becoming a reality.

There is one other way that Kalydeco is an excellent example of personalized medicine: its cost. It’s more than $300,000 a year. Because patients will likely be taking the drug for the rest of their lives, it could cost millions of dollars to keep just one patient on Kalydeco. That raises another important question about the coming of personalized medicine. How are we, as a society, going to pay for it?

What brings this question to the fore is a fight taking place in Arkansas, where the state’s Medicaid program is balking at paying for Kalydeco for a handful of young patients with cystic fibrosis. Although state officials won’t say so publicly, it is clear that cost is a key issue; The Wall Street Journal got ahold of emails that show Arkansas officials “discussing Kalydeco’s cost, and their worries about the expense of future cystic fibrosis drugs.”

It’s likely that Arkansas will eventually fold. Most state Medicaid programs — and private insurers — are paying Kalydeco’s cost because it works so well, and because the patient population is so small.

What happens, though, when there are 200 such drugs? Or when they are targeted not at cystic fibrosis, which has maybe 30,000 sufferers, but at diabetes or (heaven forbid) cholesterol? A drug called Sovaldi, marketed by Gilead Sciences, takes aim at hepatitis C. It is described as a “breakthrough” drug. But each pill costs $1,000 — and the full regimen costs $84,000. And the hepatitis C population isn’t 30,000 — it is over 3 million. If everyone with hepatitis C took Sovaldi, it would cost something like $300 billion, which is about what the country now pays for all prescription drugs combined.

“This is the future of medicine,” says Barry Werth, “and there’s going to be a reckoning.” Werth is the author of “The Antidote,” a terrific book about Vertex and its race to discover and bring to market these new kinds of drugs. “Everyone wants to see these drugs succeed,” he told me. “Wall Street is all charged up. There really hasn’t been any pushback yet on cost.”

And even when the pushback comes, as it surely will, how will we get the pharmaceutical companies to change their pricing? Brian O’Sullivan, a cystic fibrosis specialist at the University of Massachusetts Medical School, told me that he thought the price of drugs like Kalydeco was “not sustainable.” But in the next breath, he marveled at how well the drug worked and said he didn’t want to “scare companies away from doing cystic fibrosis research” by focusing too much on the cost.

When I asked Vertex how it could possibly justify charging $300,000 for Kalydeco, a company spokesman pointed to the small patient population and “the benefit that the medicine provides.” He also said that the company had spent $6.5 billion on research in its existence, and had only two drugs approved by the F.D.A. In effect, he was saying that the Vertex drug was priced, in part, to recoup not just the research and development that led to Kalydeco but all the company’s R&D. (For cystic fibrosis sufferers with no insurance, Vertex provides the drug for free.)

When I asked Werth how Vertex could charge $300,000, he had a much simpler answer: “Because they can.”

Vertex has another cystic fibrosis drug that has just come through its Phase III trial and is likely to be on the market soon. It attacks a different, more common problem than Kalydeco and may broaden the number of patients who can be helped to more than 15,000. In my talks with people in the cystic fibrosis community, I got the strong sense that they are hoping this next drug will cost less.

Dream on.

 

Cohen and Nocera

July 15, 2014

Bobo and Mr. Bruni are off today.  In “Israel’s Bloody Status Quo” Mr. Cohen says the Jews and Arabs of the Holy Land are led by men too small to effect change.  In “Helping Big Companies Compete” Mr. Nocera explains why killing the Export-Import Bank would be damaging to the economy.  Here’s Mr. Cohen:

Sheldon Adelson’s right-wing Israel Hayom, the biggest-selling newspaper in Israel, has called for Gaza to be “returned to the Stone Age.” During the last Israeli bombing campaign in Gaza, in 2012, a government minister called for Gaza to be consigned “to the Middle Ages.” Before that, there was the Gaza War of 2008-2009, in which 1,166 Palestinians died and 13 Israelis, according to the Israel Defense Forces.

The story goes on and on. There is no denouement. Gaza, a small place jammed with 1.8 million people, does not recess to the Stone, Iron, Middle or other Ages. It does not get flattened, as Ariel Sharon’s son once proposed. The death toll is overwhelmingly skewed against Palestinians. Hamas, with its militia and arsenal of rockets, continues to run Gaza. The dead die for nothing.

Israel could send Gaza back to whichever age it wishes. Its military advantage, its general dominance, over the Palestinians has never been greater since 1948. But it chooses otherwise. Prime Minister Benjamin Netanyahu’s talk of a ground invasion is empty. The last thing Israel wants, short of a cataclysm, is to go into Gaza and get stuck.

What Israel wants is the status quo (minus Hamas rockets). Israel is the Middle East’s status quo power par excellence. It seeks a calm Gaza under Hamas control, a divided Palestinian movement with Fatah running the West Bank, a vacuous “peace process” to run down the clock, and continued prosperity. Divide and rule. Hamas is useful to Israel as long as it is quiescent.

Mahmoud Abbas, the president of the Palestinian Authority, is also a status quo man. Late in his life, he is not prepared to make the painful decisions necessary to attain a two-state peace, decisions that would include relinquishing, against compensation, the so-called “right of return” for millions of Palestinian refugees. He prefers the comforts of his position and the ambiguity of concessions not formalized.

The Palestinian unity government recently established with Hamas is no more than a marriage of convenience, sought by a weakened, unpopular Hamas to escape isolation and unmet salary obligations in Gaza, and by Abbas as a distraction from his failures. There is no unity of Palestinian national purpose. There is no Palestinian democratic accountability; election talk evaporates. As for Israel, the fig-leaf Palestinian reconciliation was a godsend for its status-quo objective. Netanyahu was in sound-bite heaven, his favorite environment, on the risible notion of peace with Hamas.

None of this is edifying. Much is abhorrent: indiscriminate Hamas rockets on Israel, Israeli killing of Palestinian civilians in “collateral damage.” Yet I find myself short on moral outrage. It is all so familiar, a recurrent curse. It is a sham fight, and so doubly inexcusable. The Jews and Arabs of the Holy Land are led by men too small to effect change. Shed a tear, shed a thousand, it makes no difference.

Of course the status quo is illusory. As Secretary of State John Kerry said in Munich (to a chorus of Israeli fury), “It cannot be maintained.” True, this violence will subside. Gaza will revert to its routine misery. Peacemakers may bestir themselves. Netanyahu will find another sound bite. Things may look the same; and the next 150 dead will be part of that sameness.

But at a deeper level, things will change. Life is flux, even in the Middle East. Nothing feeds on a vacuum like radicalization. Hamas is back from the brink.

Images of blown-up Palestinian children, and that skewed death toll, will hurt Israel. Its drift toward a culture of hatred toward Arabs will continue. The murder of Muhammad Abu Khdeir in revenge for the murders of three Israeli teenagers, and the brutal police beating of his cousin, were signs. Netanyahu called the Israeli teenagers’ killers “human animals.” The liberal daily Haaretz rightly observed: “Abu Khdeir’s murderers are not ‘Jewish extremists.’ They are the descendants and builders of a culture of hate and vengeance.”

That culture is reciprocated by Palestinians toward Jews. Last month Mohammed Dajani, a professor at Al Quds University, quit after being hounded with death threats for taking a group of Palestinian students to Auschwitz. He thought young Palestinians should learn about the Holocaust, a heinous affront to the ruling order in the West Bank and Gaza. Enough said. Palestinians get weaker — a 66-year trend now — because they fail to look reality in the face.

Jews should study the Nakba. Arabs should study the Holocaust. That might be a first step toward two-state coexistence. And everyone should read the Israeli poet Yehuda Amichai’s lines about redemption only coming for all the peoples of the Holy Land when a Jerusalem guide tells his tour group:

“You see that arch over there from the Roman period? It doesn’t matter, but near it, a little to the left and then down a bit, there’s a man who has just bought fruit and vegetables for his family.”

Now here’s Mr. Nocera:

Last week, Standard & Poor’s issued a short report about Boeing. “Boeing Co. Faces Long-Term Credit Risks If The U.S. Export-Import Bank Isn’t Reauthorized,” read the alarming heading.

In dollar volume, Boeing is America’s single largest exporter. It is one of our country’s strongest manufacturers. It employs more than 150,000 people, and last year it sent checks worth $48 billion to some 15,600 subcontractors. In competing with the likes of Europe’s Airbus and Canada’s Bombardier, it takes advantage of loan guarantees and financings offered by the Export-Import Bank — just as those competitors rely on their own export credit agencies for loan guarantees and financings. Without the help it gets from the Ex-Im Bank, Boeing would undoubtedly lose business to those competitors.

And, as S.& P. was suggesting, it could also see its credit rating lowered if it had to finance and guarantee loans to its airline customers “in order to remain competitive.” Clearly, S.& P. did not view this a positive development. Nonetheless, on Monday, The Wall Street Journal’s editorial page — which is among the conservative voices leading the charge against the reauthorization of the Ex-Im Bank — hailed that same S.& P. report because it also said that, in the short term, Boeing would be able to find financing. Thus has the Ex-Im Bank become the current Rorschach test of American politics.

I am returning to this subject because I continue to find it mind-boggling that anyone in Washington would want to pursue a path that is so clearly destructive to the economy. But that is exactly what is happening. Conservative organizations like Heritage Action for America and Americans for Prosperity (financed by the Koch brothers) have made killing the Ex-Im Bank their cause. And it has been taken up by Tea Party Republicans in the House, as well as Jeb Hensarling, the powerful chairman of the House Financial Services Committee. Although it is likely that the Senate will pass a reauthorization bill this month, if the House doesn’t follow suit by the end of September, the Ex-Im Bank will not be reauthorized. Companies that rely on the Ex-Im Bank’s array of financing products to complete deals will, unquestionably, be hurt. Many of them will be small and medium-size companies that are able to export only because of the assistance they get from the Ex-Im Bank. I have written about them in previous columns.

But some will be big guns like Boeing, Caterpillar and General Electric. It’s worth dwelling on these large companies for two reasons. First, customers of these big companies get the bulk of the Ex-Im Bank’s assistance. Though this seems completely logical — the biggest companies do the biggest deals, after all — this has also made them a target of the right, which views the relationship between the bank and American multinationals as the paradigmatic example of “crony capitalism.”

Second, most of the arguments made against the Ex-Im Bank revolve around its help to the big companies, not the small ones. For instance, it is argued that big companies have their own means of helping customers finance deals. That’s true, but it’s the customers, not the companies, that are pushing for export credit guarantees. A Boeing source told me that it is hearing from customers and potential customers about the fate of the Ex-Im Bank. “It’s a big deal,” my source said, especially in places like Africa, where conventional financing for aircraft is hard to come by.

“Nobody is saying these companies are going to die if they can’t use the Ex-Im Bank,” said Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics and a member of the Ex-Im Bank’s advisory board. “The issue is their ability to meet their competition.” Hufbauer ticked off some of the competitors: Siemens of Germany is a huge company that competes with G.E.; Komatsu of Japan competes with Caterpillar; and, of course, Airbus competes with Boeing. Each of them gets assistance from their own export credit agency, none of which will go away if the U.S. decides not to reauthorize the Ex-Im Bank.

One thing the House Republicans have sought is a commitment from the Treasury Department to lobby for the elimination of export credit agencies around the world. But this is an ideological pipe dream. Other countries have no interest in walking away from export assistance; indeed, countries like China and Japan are far more wedded to this kind of assistance than the U.S. is.

In its editorial on Monday, The Journal mocked the phrase “unilateral disarmament” in regards to the Export-Import Bank. But that is what it would be. There are times when we have to accept the world as it is, rather than how we wish it would be. And like other countries, we ought to be helping our companies get business, and thus increase employment and economic growth — not forcing them to compete with one hand tied behind their backs.

Nocera and Collins

July 12, 2014

In “American Apparel Is a Lesson in How Not to Run a Company” Mr. Nocera says the juvenile antics of American Apparel’s founder finally catch up with him.  Ms. Collins has some “Rules to Run By.”  She says there’s good news, people!  There have already been many insightful and helpful hints gleaned from this election year that we can now share with 2014 hopefuls.  Here’s Mr. Nocera:

In the same week that a hedge fund, Standard General, essentially took over American Apparel, Bloomberg Businessweek published an eye-opening story about the company and its founder and former chief executive, Dov Charney. Eye-opening not in the usual manner when it comes to Charney: The magazine didn’t uncover any new allegations of sexual harassment, nor did the reporter watch him engaging in oral sex, as a writer from Jane magazine once famously witnessed.

Instead, the Businessweek story focused primarily on Charney as a businessman. That’s pretty salacious too, or at least it is if you’re a management wonk. As it turns out, both Charney and the American Apparel board offer a case study in how not to run a company. Here’s the money quote: “All along they were thinking that anything goes in Charneyville,” Thomas White, a professor of business ethics at Loyola Marymount University, told Businessweek, speaking of the directors. “They only started to worry when they looked up and saw financial disaster.”

Anything goes indeed. That infamous Jane magazine story was written a decade ago: That is how long the board has known about his antics. By the middle of 2005, reports Businessweek, Charney was facing two sexual harassment suits. (One was dismissed in arbitration; the other was settled for $1.3 million.) Yet when asked about these early allegations, Allan Mayer, a public relations executive who is co-chair of the board, said, “One of the things you learn when you do crisis management is that where there is smoke, there isn’t always fire.” Of course, another thing you learn in crisis management is that quite often when there is smoke, there really is fire. But Mayer and the rest of the board simply didn’t want to know about it.

Why was the board so willing to look the other way? One reason is that Charney had founded the company. Its identity and that of its founder were intertwined. Charney himself had no other interests outside his company — and his sex life. He viewed himself as indispensable, and the board went along with him. And if his sexually charged advertising helped make American Apparel a hit, well, you could hardly expect the office to be run like a convent.

But he also had the classic flaws of a founder. Though his passion got the company up and running, he lacked the skills necessary for guiding a large enterprise. His micromanaging drove off virtually every talented executive he ever hired. In 2007, after the company went public and he had to bring in a chief financial officer, he told The Wall Street Journal that the man he hired was a “complete loser.” Which of course caused the man to quit.

He dreamed oversized dreams — even Charney now acknowledges that after the company’s I.P.O. he probably expanded more quickly than he should have. He took pride in the fact that American Apparel’s clothes were made in America, but when the company was subjected to an immigration audit in 2009, it had to lay off half of its factory workers, according to Businessweek. “The disruption led to delayed shipments and an expensive hiring and training program.”

It has basically been downhill ever since. The company has consistently lost money — while piling up expensive debt — over the last four years. Its sales slowed dramatically. The stock has tanked. It built a new automated distribution center in 2013 that was supposed to save $5 million a year. Instead, it was so error-riddled that it cost the company “at least $15 million,” says Businessweek.

In February, Mayer, the board director, and a consultant close to Charney took him out to dinner and advised him to bring in some seasoned executives. Instead, in May, Charney forced out the general counsel.

To Businessweek — and to anyone else who will listen — Mayer insists that the board fired him because of his behavior. But it is hard to imagine that it would have done so if the company was still making money. Although American Apparel is still using Charney as a consultant, my guess is that he’ll never have a meaningful role at the company again. It needs executives who are grown-ups.

One person who saw it all coming was Robin Lewis, who writes The Robin Report, a blog about retailing. In 2011, he noted the departure of a man named Marty Staff, who had been American Apparel’s president of business development — and the former chief executive of Hugo Boss. Describing the loss of a pro like Staff as American Apparel’s “last chance for survival, lost,” he wrote: “Quite frankly, it amazes me that as C.E.O. of a publicly owned company, given American Apparel’s financial condition and his questionable and storied behavior, Charney still has a job.”

And to think: It only took the American Apparel board three more years to come to the same obvious conclusion.

Now here’s Ms. Collins:

The 2014 election year is just kicking into gear, but we’ve learned so much already. Among the political pointers for candidates of the future:

Do not attempt to curry favor with the voters by changing your name.

Scott Fistler tried to improve his extremely remote chance of winning the Democratic Congressional nomination in a largely Hispanic Arizona district by legally changing his name to Cesar Chavez. After a relative of the deceased farm labor leader filed a complaint, Fistler/Chavez was thrown off the ballot. The disappointed ex-candidate told reporters that politics is “a vicious game.”

… although it’s totally fair to go with the one you’ve already got.

Beleaguered Democrats in Texas are nurturing at least faint hopes for their current attorney general candidate, Sam Houston. “I try not to be so cynical to think that people just go in and vote for a name,” Houston said.

Try not to run ads with pictures of local residents who are actually Parisian office workers.

Mike Rounds, a Republican candidate for the U.S. Senate in South Dakota, unveiled a video in which he bragged about how much the rest of the country could learn from the folks who live in his state. It was illustrated with stock photos of models portraying wholesome average citizens, one of whom turned out to be a woman holding a pen in an office in Paris.

… or European coal miners.

Alison Grimes, the Democratic Senate candidate in Kentucky, sent reporters copies of an ad she planned to run expressing her wrath at President Obama’s new clean air rules and showing an angry-looking miner. The man was actually a Ukrainian model holding up a piece of coal. Grimes campaign aides said they had discovered the problem themselves and replaced it with a picture of an American model holding up a piece of coal.

… or maybe you should just take the pictures yourself.

Joni Ernst, the Republican Senate candidate in Iowa, became famous for her video bragging that she had spent her youth on a farm castrating hogs. She urged voters to watch the video in a posting that featured a stock photo of a pig from Denmark.

Try not to compare things to slavery.

Dr. Ben Carson, up-and-coming star of the G.O.P. right wing, spent a good part of the season denying that he had compared the Affordable Care Act to African-American enslavement. When all he actually said was that Obamacare is “the worst thing that has happened in this nation since slavery, and … it is slavery in a way because it is making all of us subservient to the government.”

… or spousal abuse.

Sarah Palin, calling for the impeachment of the president, said the influx of young illegal immigrants over the southern border “is the last straw that makes the battered wife say, ‘no mas.’ ”

Have a staff aide explain how people can take videos of you talking to private groups even when you’re totally off the record.

At a fund-raiser in Texas, Bruce Braley, a candidate for the Senate in Iowa, got caught warning a group of well-to-do trial lawyers that if Democrats don’t keep control of the Senate, the Judiciary Committee would be run by “a farmer from Iowa who never went to law school.”

Watch it when you bring up people’s sexual preference.

Texas governor and potential presidential candidate Rick Perry said people could decide whether or not they wanted to be homosexual just as “I may have the genetic coding that I’m inclined to be an alcoholic, but I have the desire not to do that.”

… or fantasy abductors.

“What are your thoughts about Thad Cochran being in with Slender Man?” Glenn Beck asked Chris McDaniel, who was running against Senator Cochran in the Mississippi Republican primary. Slender Man is a weird Internet character who abducts children. McDaniel, who laughed, lost the primary.

When you get the urge to suggest that a politician might be assassinated, repress it.

Johnny Rhoda, a Republican official in Arkansas, said that if Hillary Clinton returned there as a presidential candidate “she’d probably get shot at the state line.” He claimed he was quoted out of context, then turned in his resignation.

… in fact, think twice before discussing anything that involves people being shot.

A candidate for a Republican Congressional nomination in Arizona apologized after saying during a debate that “99 percent” of the mass shootings in America “have been by Democrats.”

If you can’t say anything nice …

Eric Cantor used part of his vast pile of campaign cash to launch a series of attack ads against his totally unknown primary opponent in Virginia. Cantor’s constituents were surprised and delighted to hear that there was actually someone running against him, and promptly voted the House majority leader out of office.

… really, stop advertising.

A new report from the Brookings Institution suggests higher spending on anti-Obamacare ads may lead to higher Obamacare enrollment.

Brooks and Nocera

July 8, 2014

Mr. Bruni is off today.  Bobo thinks he can tell us all about “The Creative Climate.”  He gurgles that creative tension between people and within individuals is fundamental to social evolution.  He uses Lennon and McCartney as examples.  “Gemli” from Boston begins a lengthy comment with this:  “The whirring sound you hear is John Lennon spinning in his grave, disturbed from his rest by being used as a prop to promote conservative political ideology. He doesn’t look happy.”  Mr. Nocera takes a look at “The Messy World of Smart Guns” and says advancements in technology and legislation run up against the N.R.A.   In the comments “Craig Geary” of Redlands, FL had this to say:  “The NRA stance against smart gun technology is about as honest as the claimed patriotism of NRA Grand Panjandrum Wayne La Pierre.  Old Blood, Guts and Dead School Children holds himself out as a red blooded American.  Always failing to mention he got himself exempted from the Viet Nam draft for an alleged ‘anxiety disorder’.  As in, little Wayne was a tad anxious about the possibility of getting shot.”  Here’s Bobo:

In the current issue of The Atlantic, Joshua Wolf Shenk has a fascinating description of how Paul McCartney and John Lennon created music together. McCartney was meticulous while Lennon was chaotic. McCartney emerged out of a sunny pop tradition. Lennon emerged out of an angst-ridden rebel tradition.

Lennon wrote the song “Help” while in the throes of depression. The song originally had a slow, moaning sound. McCartney suggested a lighthearted counter melody that, as Shenk writes, fundamentally changed and improved the nature of the piece.

Lennon and McCartney came from different traditions, but they had similar tastes. They brought different tendencies to the creative process but usually agreed when the mixture was right. This created the special tension in their relationship. They had a tendency to rip at each other, but each knew ultimately that he needed the other. Even just before his death, Lennon was apparently thinking of teaming up with McCartney once again.

Shenk uses the story to illustrate the myth of the lone genius, to show that many acts of genius are the products of teams or pairs, engaged in collaboration and “co-opetition.” And we have all known fertile opposites who completed each other — when they weren’t trying to destroy each other.

But the Lennon-McCartney story also illustrates the key feature of creativity; it is the joining of the unlike to create harmony. Creativity rarely flows out of an act of complete originality. It is rarely a virgin birth. It is usually the clash of two value systems or traditions, which, in collision, create a transcendent third thing.

Shakespeare combined the Greek honor code (thou shalt avenge the murder of thy father) with the Christian mercy code (thou shalt not kill) to create the torn figure of Hamlet. Picasso combined the traditions of European art with the traditions of African masks. Saul Bellow combined the strictness of the Jewish conscience with the free-floating go-getter-ness of the American drive for success.

Sometimes creativity happens in pairs, duos like Lennon and McCartney who bring clashing worldviews but similar tastes. But sometimes it happens in one person, in someone who contains contradictions and who works furiously to resolve the tensions within.

When you see creative people like that, you see that they don’t flee from the contradictions; they embrace dialectics and dualism. They cultivate what Roger Martin called the opposable mind — the ability to hold two opposing ideas at the same time.

If they are religious, they seek to live among the secular. If they are intellectual, they go off into the hurly-burly of business and politics. Creative people often want to be strangers in a strange land. They want to live in dissimilar environments to maximize the creative tensions between different parts of themselves.

Today we live in a distinct sort of creative environment. People don’t so much live in the contradiction between competing worldviews. We live in a period of disillusion and distrust of institutions.

This has created two reactions. Some monads withdraw back into the purity of their own subcultures. But others push themselves into the rotting institutions they want to reinvent. If you are looking for people who are going to be creative in the current climate, I’d look for people who are disillusioned with politics even as they go into it; who are disenchanted with contemporary worship, even as they join the church; who are disgusted by finance even as they work in finance. These people believe in the goals of their systems but detest how they function. They contain the anxious contradictions between disillusionment and hope.

This creative process is furthest along, I’d say, in the world of B corporations. There are many people today who are disillusioned both with the world of traditional charity and traditional capitalism. Many charities have been warmheartedly but wastefully throwing money at problems, without good management or market discipline. Capitalists have been obsessed with the short-term maximization of shareholder return without much concern for long-term prosperity or other stakeholders.

B corporations are a way to transcend the contradictions between the ineffective parts of the social sector and myopic capitalism. Kyle Westaway, a lawyer in this field and the author of the forthcoming “Profit & Purpose,” notes that benefit corporation legal structures have been established in 22 states over the last four years. The 300 or so companies that have registered in this way, like Patagonia or Method, can’t be sued if they fail to maximize profits in order to focus on other concerns. They are seeking to reinvent both capitalism and do-gooder-ism, and living in the contradiction between these traditions.

This suggests a final truth about creativity: that, in every dialectic, there is a search for creative synthesis. Or, as Albert Einstein put it, “You can never solve a problem on the level on which it was created.”

I wonder if Bobo is ever going to address politics again, or if he’s too ashamed to admit he’s a member of the party of the Mole People…  Here’s Mr. Nocera:

The Andy Raymond rant is a thing to behold.

Raymond, the co-owner of Engage Armament in Montgomery County, Md., is one of the two gun dealers who, a few months ago, tried to sell the Armatix iP1 — a.k.a., the first commercially available “smart gun” — to his customers. He thought that not only did he have every right to sell a smart gun, but that he was doing the gun world a favor by offering a gun that had the potential to expand the universe of gun owners. Instead, both Engage Armament and Oak Tree, a California-based gun dealer, backed away after receiving a torrent of hate mail and death threats from gun-rights absolutists.

In the rant, which he posted on his Facebook page, Raymond is sitting in front of an array of semiautomatic weapons. He has a bottle of what appears to be whiskey next to him. He acknowledges that he’s been drinking. From time to time, he takes a puff on a cigarette. (I don’t have a Facebook page, so I relied on excerpts from the rant that were shown on Chris Hayes’s MSNBC show, “All In.”)

“How can the N.R.A. want to prohibit a gun when we’re supposed to be pro-gun?” he says. “How hypocritical is that?” Then, after an angry, expletive-filled shout-out to those who sent him death threats, he changes direction. He denies ever selling an Armatix pistol. And then he says, “I thought my principles were correct, but maybe I was wrong.” And he apologizes. And with one last gulp of whiskey, he is done.

Which is to say, he epitomizes the state of smart guns right now. The whole thing is a bit of a mess.

I last looked into smart gun technology about a year and a half ago, and what I saw then was a lot of ferment — and genuine excitement about the potential of smart-gun technologies. I found people who had been working on smart guns for years, like Don Sebastian of the New Jersey Institute of Technology, and newcomers to the field like Ron Conway, the Silicon Valley investor who was galvanized by the massacre in Newtown, Conn., and began backing a smart-gun effort. It was also the first time I heard about a New Jersey law that said that if smart guns became commercially available anywhere in the country, New Jersey gun dealers would be required, within three years, to sell only guns that had smart-gun technology.

The idea, said Loretta Weinberg, the New Jersey Senate majority leader who sponsored the legislation 12 years ago, was partly to spur gun innovation. Instead, it held back innovation, as traditional gun manufacturers saw no incentive in investing in smart-gun technology. It was also vehemently opposed by the National Rifle Association, which viewed it, not incorrectly, as a gun control effort. Gun advocates mocked smart-gun technologies, claiming the “bad guys” with normal guns would have the advantage over the “good guys” with smart guns.

The New Jersey law was at the heart of the objections to Oak Tree and Engage Armament selling the Armatix smart gun. The fear of gun advocates is that if someone did start selling a commercialized smart gun, the three-year clock would start ticking in New Jersey.

When I spoke to smart-gun advocates this time around, I found a great deal of mixed emotions about the New Jersey law. Jonathan Mossberg, who runs something called the iGun Technology Corporation — and is an avowed gun advocate — told me that the New Jersey mandate “needs to be repealed.”

Stephen Teret, the co-director of the Center for Law and the Public’s Health at Johns Hopkins University — and an expert on smart-gun technology — said that he thought the law would soon be irrelevant. “There will be a personalized gun sold very soon,” he told me. “It will be the Armatix gun that people are talking about.” He wouldn’t tell me who the seller would be, however.

Senator Weinberg acknowledged that her bill may have become an impediment rather than a spur to gun safety.

There is still a lot going on in smart-gun technology. Sebastian continues to plug away at a technology that would recognize an owner’s grip, and only allow that person to use the gun. Ron Conway’s group, the Smart Tech Foundation, just awarded a total of $1 million to 15 grantees that are working on promising smart-gun technologies.

As for Weinberg, she told me that she had approached the N.R.A. as recently as two weeks ago and said she would try to get her law repealed if the N.R.A. would promise not to block smart-gun technology from reaching the marketplace. “I said we might have some common ground here.” The N.R.A. did not reply.

What a surprise.

Nocera and Collins

July 5, 2014

In “My American Family” Mr. Nocera says a previous generation of immigrants now supports today’s immigrants.  Ms. Collins tells us “About Those Presidential Polls” and says opinions about presidents change, people. Yeah, it’s bad being Barack Obama right now, but it’s way worse to be Warren Harding.  Here’s Mr. Nocera:

On the Fourth of July 1951, my parents were married. Not long ago, I asked my mother, who, at 87, is still going strong, why they chose that date. I thought there might have been some symbolism. She quickly disabused me. It was because that was the only time “the market” would be closed, and my father’s family could attend the wedding.

The market was Nocera’s Grocery Store, on Smith Street, in Providence, R.I. My grandfather Lawrence, who also opened a liquor store a short block away, had started it in the early 1930s.

Like many immigrants, Lawrence was a risk-taker. He had gone to Rhode Island from Italy at the age of 8 with an older brother. When Prohibition ended in 1933, he and his brother opened a liquor store. When it became clear that that first store couldn’t support both families, my grandfather opened a second liquor store in the Mount Pleasant section of Providence — then an Irish middle-class enclave — a block from the grocery store. My father, who was a high school math teacher, worked there part time, but his five siblings spent the better part of their adult lives working for either the grocery store or the liquor store.

My mother’s side of the family was Boston Irish and English. As my mother tells the story, her grandmother’s sister, a young girl in Ireland, was sent to sell a cow; she used the money to buy a ticket to America. Then, once she settled in Brighton, Mass., she saved enough money to bring her sister over, too. That was my great-grandmother. By the time my mother was born, the Irish dominated Boston politics — and the patronage that went along with it. They voted for Irishmen on the ballot. Not surprisingly, my mother had two uncles who were Boston cops.

My mother says that while growing up in Providence, where she moved as a child, she never thought of herself in particularly ethnic terms; that may have been because her generation had been in America long enough that their tribal identity had begun to fade. But my father and his brothers and sisters were keenly aware that they were Italian-American — and it was not always a happy thought. Like many children of immigrants, what they wanted was to be thought of as Americans, not ethnic Americans. They spoke Italian to my grandmother, who spoke no English, but they rarely spoke Italian to each other. They eventually lost contact with their Italian relatives.

When World War II broke out, my father and his two brothers immediately joined the armed forces; my uncle, Dan, had his elbow shot up during the Normandy invasion. My father and his siblings all had Italian first names, which bothered some of them to no end. Dan’s given name had been Dante; he changed his name long before I was born.

Still, they rooted for the Yankees because of Joe DiMaggio, and voted for John O. Pastore, who became the nation’s first Italian-American governor in 1945, and its first Italian-American senator in 1950. For much of the next three decades, Italian-Americans dominated local politics and patronage in Providence, just as the Irish had in Boston.

My mother tells me that on the eve of her marriage to my father, one of her relatives pulled her aside and said, “They’re not like us, you know.” But my mother could already see that that wasn’t true in any way that truly mattered. As Italians and Irish began to intermarry, tribal instincts lessened to the point of disappearing. My last name is about the only Italian thing about me. The same is true for my siblings and cousins. We epitomize the melting pot. We never vote based on ethnicity alone.

The mayor of Providence today is Angel Taveras. He is the child of immigrants from the Dominican Republic, and is the first Hispanic to serve as the city’s mayor. Over the last decade-plus, Hispanics have become the single largest ethnic group in Providence, outnumbering whites 38.1 percent to 37.6 percent, according to the 2010 census data.

Taveras is now running for governor, and one of the people campaigning to replace him as mayor is Jorge Elorza, the child of Guatemalan immigrants. Also running for mayor is Vincent “Buddy” Cianci, who has, famously, twice been the mayor of Providence, and had to leave office twice on felony convictions. Bob Plain, a liberal political analyst in Rhode Island, told me recently that the Cianci candidacy would be “an interesting referendum on your parents’ Providence.”

My mother, for one, is not longing for a return to those days. She recently threw a meet-and-greet for Taveras, whom she also supported when he was running for mayor.

“He’s going to win,” she said enthusiastically. It’s their turn, I could almost hear her thinking.

Now here’s Ms. Collins:

Perhaps you’ve heard that Barack Obama was named the worst president since World War II in a recent poll. It isn’t all that surprising. Given the current mood of the country, it’s likely that if St. Francis of Assisi were in the White House, he would be getting terrible ratings, too.

Opinions about presidents change. I am pointing this out mainly because it gives me an opening to bring up Warren Harding.

July is going to be Warren Harding’s month. It’s really exciting, given the fact that Harding hasn’t had a month, or even a day, since around 1928. “Warren Harding is best known as America’s worst president,” wrote John Dean at the beginning of his Harding biography.

Yes! This is the same John Dean who was White House counsel in the Nixon administration. He knows about terrible presidents, and he is totally on Harding’s side.

Later this month the Library of Congress is going to open up a huge cache of love letters that Harding wrote to one of his neighbors in Marion, Ohio. The Times Magazine will be publishing some of the most interesting missives next week. They were sent to Carrie Phillips, who was his wife’s best friend and might conceivably have been a German spy.

If that’s not enough of a draw, I will feel forced to reveal that Harding refers to his most private part as “Jerry.”

“He was a very funny guy. Just a nice sense of humor,” said James Robenalt, who discovered copies of the letters and wrote about them in “The Harding Affair.” Robenalt, like Dean, thinks Harding is a vastly underestimated president.

Not everyone agrees that he’s due for a renaissance. “If you had to reach for a great revisionist mountain to climb, that would be it,” said the presidential historian Michael Beschloss dryly.

When it comes to the long view of presidential achievement, you have to turn to the historians — people who have managed to acquire strong opinions about Millard Fillmore and Benjamin Harrison. We obviously can’t tell yet where Obama will rank. If the Affordable Care Act works out over the long run, he could do very well. Certainly nothing that’s happened so far in his presidency would put him anywhere near the bottom. Most of the chief executives who dwell there came from the Civil War era — like Franklin Pierce and James Buchanan, who sided with the slave owners on the way in, or Andrew Johnson, who screwed things up on the way out.

It doesn’t seem fair that Warren Harding is stuck with them. His appointees presided over several really juicy political scandals, including Teapot Dome, which was both one of the worst corruption cases in American history as well as the one with the most interesting name. That was definitely bad, but not really in the same ballpark.

His defenders, like Robenalt and Dean, point out that Harding was, for his time, extremely progressive when it came to racial issues. Plus he got the Senate to approve an international disarmament agreement, which seems impressive when viewed from an era in which the Senate is incapable of rubber-stamping the United Nations Convention on the Rights of Persons With Disabilities.

Harding’s longtime lover and correspondent, Carrie Phillips, was a German sympathizer during World War I and Robenalt thinks she was actually a German spy. Her family disagrees. Either way, it’s pretty clear from the letters that, while Harding loved her “pillowing breasts,” he had very little appreciation for her theories about foreign affairs.

Nothing nearly that interesting appears to be going on in the current White House. Maybe the public is just bored. “The sixth year is tough for everybody,” said Tim Malloy, a spokesman for the Quinnipiac University poll, which recently announced that it had surveyed 1,446 registered voters, about a third of whom thought Obama is the worst president since 1945. George W. Bush came in second at 28 percent. This isn’t all that wide a margin, until you ask yourself who was running the show when the economy crashed and Iraq got invaded.

After the results came in, Malloy said, the researchers looked back at recent two-term presidents and concluded that all of them bottomed out in the middle of their second term. It makes sense that in a world of incessant communication, there’s just so much you can take of any chief executive. The guy we’ve been stuck with for a long time seems awful, because he’s the guy we’ve been stuck with for a long time. Our attitude toward him doesn’t improve until we’ve been reminded that things could be much worse.

Nearly half the respondents told Quinnipiac that they thought the country would be better off if Obama had lost the last election. It’s an opinion that could easily be reversed by an actual threat of the return of Mitt Romney.

Brooks, Cohen, Nocera and Bruni

July 1, 2014

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.

Nocera and Collins

June 28, 2014

In “G. M.’s Rival Could Teach It a Lesson” Mr. Nocera says accountability and teamwork were crucial to Ford’s turnaround.  In “The Eggs and Us” Ms. Collins says we need to talk about the personhood movement, people. Persons. Persons who need persons …  Here’s Mr. Nocera:

“How do you change the culture?” the “Today” show’s Matt Lauer asked Mary Barra, the chief executive of General Motors, earlier this week. “How do you go about communicating to the people who have been part of the history of this company for years that things must change?”

In the three weeks since Anton Valukas, the former federal prosecutor, issued his blistering report about the company’s decade-long failure to properly handle the Chevy Cobalt ignition switch problems, that has become the burning question surrounding the company. The idea that a “new, improved” General Motors emerged from the company’s 2009 brush with bankruptcy has been exposed as bogus. In his report, Valukas talks about the “G.M. nod” (that’s when managers nod in agreement about a course of action, but then do nothing) and the “G.M. salute” (arms folded and pointed outward to others, as if to say that the problem is someone else’s responsibility.) Bureaucratic malaise still rules. Silos still reign. So does a certain unjustified arrogance.

“When I was covering G.M., I would ask them sometimes how they were so sure a plan or product would work,” recalls Bryce Hoffman, a former reporter for The Detroit News. “They would say, ‘We’re G.M. It will work.’ ”

I had called Hoffman less to talk about General Motors than to ask him about Ford. Two years ago, Hoffman published a book entitled “American Icon: Alan Mulally and the Fight to Save Ford Motor Company.” Mulally, who became Ford’s chief executive in 2006 after a long career at Boeing, did indeed save Ford, in no small part by doing exactly what Barra hopes to do at G.M.: He changed Ford’s culture. The company went from losing $12.7 billion in 2006 to making $8.6 billion last year. On the eve of Mulally’s retirement — July 1 is supposed to be his last day — it seemed like a good idea to take a look back at how he did it. There might be some lessons for G.M.

To be sure, part of what he did was to come up with a plan — simplifying the product line; making smaller, more fuel-efficient cars; borrowing every penny available to Ford so it could ride out the rough years ahead. But he also stuck with the plan. Once he had his vision for the company, he repeated it at the start of every meeting, whether the audience was Ford executives, securities analysts or journalists. Ford had been notorious for changing its business plan every six months. That stopped under Mulally.

“That laserlike focus and consistency was huge,” says Hoffman.

Before Mulally showed up, Ford had a cutthroat, careerist culture, in which executives were more than happy to make themselves look good by making a rival executive look bad. “European cars were tweaked so that they could not meet U.S. safety requirements without expensive engineering changes, and cutting-edge technology developed in America was kept from the team in Europe,” writes Hoffman, citing one of the most famous examples of Ford executives undercutting one another.

So a second key goal for Mulally was to get the company’s executives to be accountable, and to begin working together. His primary vehicle for accomplishing this was a meeting he held every Thursday morning; all the company’s top executives were expected to attend. Each executive was expected to give an update on the status of his or her division and point out any potential problems. Mulally instituted a red, yellow and green colored system — with red signaling a big problem, and green meaning everything was fine.

For the first several weeks, every executive’s report was all green. Mulally finally said, “We’re going to lose billions of dollars this year. Is there anything that’s not going well here?” When one executive decided to admit to a serious problem at the Thursday meeting, he — and the other executives — assumed he would be fired. Instead Mulally starting clapping: “Great visibility,” he said. That executive, Mark Fields, is about to succeed Mulally as Ford’s next chief executive.

Finally, there was the compensation system. Executives used to be paid based on the performance of their divisions. Now, the bulk of their compensation is based on meeting the company’s larger corporate goals. “It made everyone invested in everyone else’s success,” says Hoffman.

Mulally had several big advantages over Mary Barra. First, he was an outsider; he could easily see what was wrong with the culture because he had never been steeped in it. Second, the system he brought to Ford was one that he had already mastered at Boeing — he knew it would work. Barra seems to understand at least some of what is wrong with G.M.’s culture — she herself is the one who told Valukas about the G.M. nod. The tougher question is whether she knows how to change it.

She might want to start thinking about a Thursday morning meeting.

Now here’s Ms. Collins:

Let’s talk personhood, people.

Personhood is an anti-abortion movement that holds that life begins at conception, giving fertilized eggs all the rights of a human being. It might make it impossible to kidnap them for in-vitro fertilization. It could outlaw some forms of contraception.

Senator Rand Paul claims every fertilized egg is protected by the 14th Amendment. Many current Senate candidates are personhood supporters, including Cory Gardner, who is running a very close race in Colorado against Mark Udall.

No! Wait! Wait! Cory Gardner just changed his mind. Obviously, this is going to take a little unraveling. Give me a minute.

The abortion issue has been on everyone’s mind lately. On Thursday, the Supreme Court issued a unanimous finding that the 35-foot buffer zones around Massachusetts abortion clinics violated protesters’ freedom of speech. We do not have time to discuss this in detail, except to point out that this decision came from people who work in a building where the protesters aren’t allowed within 250 feet of the front door.

Bigger news is expected on Monday, when the court is scheduled to tell us whether business owners have a right to express their religious beliefs by eliminating certain contraceptives from their employees’ health care coverage. This is the Hobby Lobby case, which is going to bring us right back to personhood in no time at all.

The Green family, which owns Hobby Lobby, believes as a matter of faith that human life begins at the moment of conception. So, despite the Affordable Care Act’s requirement that employee health plans cover contraceptives, the Greens draw the line at anything that they believe might endanger a fertilized egg, like Plan B, or IUDs. Many scientists would disagree with the Greens’ theory about how contraceptives work, but it doesn’t matter. Religion trumps.

Both Hobby Lobby and the personhood movement mark a turning point in our long, grueling national battle over reproductive rights. Many Americans are repelled by late-term abortion, but they don’t necessarily feel the same emotional affinity for a fertilized egg. The fact that this is actually a debate about theological dogma gets a lot clearer when you’re closer to the start of the gestational saga.

When given the opportunity, voters have made it very clear that they don’t like the idea of hurting childless couples’ chances for in-vitro fertilization out of concern for the constitutional rights of the eggs. A personhood amendment to the State Constitution was rejected in a referendum in Mississippi. Also twice in Colorado.

But the beat goes on. Presidential hopeful Rand Paul introduced a version of the personhood law in the Senate. “I am 100 percent pro-life. I believe life begins at conception and that abortion takes the life of an innocent human being. It is the duty of our government to protect this life as a right guaranteed under the Constitution. For this reason, I introduced S. 583, the Life at Conception Act on March 14, 2013,” he said on his website.

On March 19, 2013, Paul discussed the matter on CNN with Wolf Blitzer, who asked whether there should be any exception for rape, incest or the life of the mother. Instantly, Paul announced that there were actually “thousands of exceptions. You know, I’m a physician, and every individual case is going to be different and everything is going to be particular to that individual case and what’s going on with that mother and the medical circumstances of that mother.”

To summarize: 100 percent pro-life except for thousands of exceptions.

This should be a big issue in November. North Dakota has a personhood referendum coming up. A number of Republican candidates in key Senate races are personhood supporters, including Joni Ernst in Iowa; Thom Tillis, who’s running against Senator Kay Hagan in North Carolina; Tom Cotton, who’s challenging Mark Pryor in Arkansas; and, until about five minutes ago, Cory Gardner in Colorado.

Gardner had supported the unsuccessful personhood referendums in Colorado when he was a state representative. Then he went to Congress in 2010, and twice co-sponsored Life Begins at Conception bills there. Then he announced he was running for the Senate against Mark Udall.

Then he announced that he had changed his position on personhood entirely. “The fact that it restricts contraception, it was not the right position,” he told The Denver Post recently.

Supporters said it was unfair to presume that his change of heart was inspired by the need to run a statewide race in a state that had twice rejected the idea by 3 to 1 majorities.

Give him a break. This doesn’t have to be a spur-of-the-moment flip-flop for purely partisan purposes. Maybe he never noticed the contraception problem. While he was co-sponsoring the bills in Congress.

Once again, we are reminded that men do not get pregnant.

Or corporations. We keep being told they’re people, but if they were people who could reproduce, I guarantee you contraceptives would not only be free, there would be a tax break for taking them.

I’ve said it before and I’ll say it again — if men got pregnant abortion would be a sacrament.

Brooks and Nocera

June 24, 2014

Bobo has decided to try giving us marriage advice.  In “Rhapsody in Realism” he gurgles that long love is built on understanding the nuances of human nature, including human frailty.  In the comments “gemli” from Boston sums it up for us:  “It seems Mr. Brooks is channeling Abigail Van Buren, and doing a fine job. What could be more appropriate than learning about love and relationships from a conservative opinion writer? It makes me wish Charles Krauthammer would dispense dating advice, but let’s not get greedy. Brooks actually strays a bit into Erma Bombeck territory with the wry recipe for surviving marital exasperation, but I don’t think Dear Abby will mind.”  Mr. Nocera, in “New Leader, New Attack on Exports,” says the campaign against the Export-Import Bank gains steam now that the House has elected a new majority leader.  Here’s Bobo:

A few years ago, I came across an article on a blog that appealed tremendously. It was on a subject that obviously I have a lot to learn about. But it was actually the tone and underlying worldview that was so instructive, not just the substance.

The article was called “15 Ways to Stay Married for 15 Years” by Lydia Netzer. The first piece of advice was “Go to bed mad.” Normally couples are told to resolve each dispute before they call it a night. But Netzer writes that sometimes you need to just go to bed. It won’t do any good to stay up late when you’re tired and petulant: “In the morning, eat some pancakes. Everything will seem better, I swear.”

Another piece of advice is to brag about your spouse in public and let them overhear you bragging.

Later, she tells wives that they should make a husband pact with their friends. “The husband pact says this: I promise to listen to you complain about your husband even in the most dire terms, without it affecting my good opinion of him. I will agree with your harshest criticism, accept your gloomiest predictions. I will nod and furrow my brow and sigh when you describe him as a hideous ogre. Then when your fight is over and love shines again like a beautiful sunbeam in your life, I promise to forget everything you said and regard him as the most charming of princes once more.”

Most advice, whether on love or business or politics, is based on the premise that we can just will ourselves into being rational and good and that the correct path to happiness is a straight line. These writers, in the “Seven Habits of Highly Effective People” school, are essentially telling you to turn yourself into a superstar by discipline and then everything will be swell.

But Netzer’s piece is nicely based on the premise that we are crooked timber. We are, to varying degrees, foolish, weak, and often just plain inexplicable — and always will be. As Kant put it: “Out of the crooked timber of humanity no straight thing was ever made.”

People with a crooked timber mentality tend to see life as full of ironies. Intellectual life is ironic because really smart people often do the dumbest things precisely because they are carried away by their own brilliance. Politics is ironic because powerful people make themselves vulnerable because they think they can achieve more than they can. Marriage is ironic because you are trying to build a pure relationship out of people who are ramshackle and messy. There’s an awesome incongruity between the purity you glimpse in the love and the fact that he leaves used tissues around the house and it drives you crazy.

People with a crooked timber mentality try to find comedy in the mixture of high and low. There’s something fervent in Netzer’s belief in marital loyalty: “You and your spouse are a team of two. It is you against the world. No one else is allowed on the team, and no one else will ever understand the team’s rules.” Yet the piece is written with a wry appreciation of human foibles. If you have to complain about your husband’s latest outrage to somebody’s mother, she writes, complain to his mother, not to yours. “His mother will forgive him. Yours never will.”

People with a crooked timber mentality try to adopt an attitude of bemused affection. A person with this attitude finds the annoying endearing and the silly adorable. Such a person tries to remember that we each seem more virtuous from our own vantage point than from anybody else’s.

People with a crooked timber mentality are anti-perfectionist. When two people are working together there are bound to be different views, and sometimes you can’t find a solution so you have to settle for an arrangement. You have to design structures that have a lot of give, for when people screw up. You have to satisfice, which is Herbert Simon’s term for any option that is not optimal but happens to work well enough.

Great and small enterprises often have two births: first in purity, then in maturity. The idealism of the Declaration of Independence gave way to the cold-eyed balances of the Constitution. Love starts in passion and ends in car pools.

The beauty of the first birth comes from the lofty hopes, but the beauty of the second birth comes when people begin to love frailty. (Have you noticed that people from ugly places love their cities more tenaciously than people from beautiful cities?)

The mature people one meets often have this crooked timber view, having learned from experience the intransigence of imperfection and how to make a friend of every stupid stumble. As Thornton Wilder once put it, “In love’s service only wounded soldiers can serve.”

Now here’s Mr. Nocera:

In the real world, markets aren’t perfect.

If they were, you wouldn’t need Fannie Mae to play such a vital role in housing finance. You wouldn’t need government to fund research. And you certainly wouldn’t rely on an export credit agency to help promote American exports and create American jobs. Surely, the private sector can handle that.

And, indeed, in some 98 percent of American export transactions, the private sector does just fine. But then there’s the other 2 percent. There’s the small business that wants to expand abroad but can’t find a bank willing to take a risk on a newbie exporter. There’s the midsize manufacturer for whom financing insurance by the government is a necessity — in large part because its competitors in other countries are able to offer prospective buyers government financing insurance. And there are big companies like Boeing that operate in a global industry where the assistance of an export credit agency is baked into the business model.

Our country’s export credit agency is called the Export-Import Bank of the United States. Last year, it helped 3,413 small companies start or expand their export business. It also helped Boeing land aircraft sales against Airbus. In the aftermath of the financial crisis, the Ex-Im Bank stepped in because banks had become skittish. It exists precisely because markets aren’t perfect.

Or as Douglas Holtz-Eakin, the prominent conservative economist — and president of the American Action Forum — put it to me on Monday: “I share the belief that I would like to live in a world without the Ex-Im Bank. Unfortunately, that is not the world we live in.”

When I first wrote about the Ex-Im Bank two weeks ago, I did so because the bank’s late September reauthorization, which never used to be in question, was under serious assault by such ultraconservative groups as the Club for Growth, Americans for Prosperity and Heritage Action. They made the fundamentally ideological argument that the bank was putting taxpayers’ money at risk handling tasks the private sector was better equipped to handle. It is not true, but it made for a glorious Tea Party sound bite.

My assumption, however, was that cooler heads would eventually prevail, and the Export-Import Bank would be reauthorized. That’s what happened in 2012, which was the first time the bank came under ideological attack.

On Sunday, however, that calculus changed. Kevin McCarthy, the California Republican who was elected to replace Eric Cantor as the House majority leader, said on “Fox News Sunday” that “I think Ex-Im Bank is … something the government does not have to be involved in.” He added that he wouldn’t support reauthorization.

Two years ago, McCarthy did support reauthorization, and it is pretty obvious what transpired. In order to gain the votes of the Tea Party conservatives in Congress, McCarthy chose to sell American exports down the river.

Business is now up in arms. On Monday, the Chamber of Commerce and the National Association of Manufacturers held a conference call to decry the threat to the Export-Import Bank and promised a “full-court press” to get Congress to take up the reauthorization. (Late Monday, The Wall Street Journal added fuel to the fire, reporting that four Ex-Im Bank employees had been removed or suspended amid investigations.)

Meanwhile, Holtz-Eakin’s group, American Action Forum, has done some solid research knocking down many of the ideological arguments. For instance, the Ex-Im Bank’s opponents claim that the assistance given to Boeing is nothing more than “crony capitalism.” But Andy Winkler of American Action Forum notes that “Ex-Im’s activities reflect the structure of U.S. trade itself, supporting a large number of small and medium-sized exporters, but with the largest dollar volumes concentrated among large firms.”

Then there are small and medium-size exporters themselves. One former small businessman is Chris Collins, a freshman Republican whose district includes Buffalo. Before being elected to Congress, he owned a company called Audubon Machinery Corporation, which got a combination of guarantees and insurance from the Export-Import Bank worth $8.33 million between 2007 and 2014.

Needless to say, this made him the target of Heritage Action. But when I spoke to him on Monday afternoon, he was completely unapologetic. Indeed, he was in the process of sending a letter, signed by 41 Republican congressmen, asking McCarthy and Speaker John Boehner to allow a reauthorization vote.

What he learned over the years, he told me, “is the importance of the Ex-Im Bank for companies with $10 million to $20 million in sales, like ours.” For instance, banks worry about accounts receivables from companies in developing nations. “A company can pay a fee to the Ex-Im Bank and get accounts receivable insurance. Without the Ex-Im, some of our business would be all but impossible.”

“I was really caught off guard when Heritage went after me,” he said as our conversation was winding down. Then he added, “They must not understand what is required to be an exporter.”

Nocera, solo

June 21, 2014

Ms. Collins is off today, so Mr. Nocera has the place to himself.  In “Amateurism and the N.C.A.A.” he says President Mark Emmert of the N.C.A.A. takes the stand in the O’Bannon trial to defend a business model.  Here he is:

It was Thursday of Week 2 at the O’Bannon trial, the day Mark Emmert, the president of the N.C.A.A., was going to be on the stand.

By 6:30 a.m., reporters and others had begun gathering outside the courthouse here, waiting to get in. So many people showed up to see Emmert testify that some had to be shunted to an overflow room. In any antitrust trial, the two sides’ dueling economists are usually the most important witnesses. Be that as it may, there was not much doubt that Emmert was going to be the star witness.

Although the N.C.A.A. has been sued plenty of times in its 100-plus-year existence, it has never faced a lawsuit quite like this one, which takes dead aim at its business model. Named for its lead plaintiff, Ed O’Bannon, the former U.C.L.A. basketball star, the suit charges that the N.C.A.A.’s rules deprive current and former athletes of the ability to make money from one’s name, image and likeness. And this, the suit says, is a violation of the nation’s antitrust laws.

The N.C.A.A.’s business model, of course, is a model in which big-time college sports are highly commercialized endeavors, generating billions of dollars from TV contracts and sponsors, spoils that are then shared by all those involved in college sports — except the athletes themselves. The players, meanwhile, are expected to generate those revenues for no more than a scholarship and a pat on the back. The N.C.A.A.’s “core value,” as Emmert put it often on the stand, is amateurism, the idea that the athletes are students first, and are playing purely for the love of their sport and their school.

If a player were to get paid for his name, image or likeness — whether in a video game, a poster or any other medium — he would be accepting money, and thus, according to the N.C.A.A., violating the amateur code. So, in order to attack that concept, the plaintiffs had to attack the very concept of amateurism itself. That is why this case is such a threat to the N.C.A.A.

One way the plaintiffs went about that was to show the various ways that college athletes are exploited commercially — by their own schools. As part of its amateurism code, the N.C.A.A. vows to “protect” players from commercial exploitation. But after William Isaacson, the plaintiffs’ attorney, while, cross-examining Emmert, asked him a series of questions about commercial exploitation, Isaacson put up a series of photographs showing college players at press conferences, standing in front of walls that were festooned with corporate logos. In several cases, Emmert was reduced to saying that although the examples shown were within the rules, he was personally uncomfortable with them.

(Disclosure: My wife works for Boies, Schiller & Flexner, the same firm as Isaacson. She is not involved in the case and does not stand to profit if O’Bannon wins.)

As so often happens, the trial is offering a kind of shadow history of the N.C.A.A. Memos and emails are being introduced that show that there has been concern for years inside the N.C.A.A. and member schools about the very issues being litigated. For instance, O’Bannon brought suit after he saw an avatar in an EA Sports video game that was clearly modeled after him. Inside the N.C.A.A., executives discussed the avatar problem and whether it went too far.

There were several references in emails to amateurism that were less than reverential and gave one a sense that amateurism was really anything that the N.C.A.A. said it was. Emmert had wanted to introduce a $2,000 stipend to the basic scholarship to help cover the miscellaneous expenses that come with going to college. Had it gone through — it was voted down by the membership — it would have meant that a player could pocket an extra $2,000 and remain an amateur. Why? Because the N.C.A.A. said so.

Meanwhile, the plaintiffs unearthed several internal emails that used the word “hypocrisy” to describe the N.C.A.A.’s business model.

“You are focusing on the word ‘hypocrisy,’ ” Emmert said.

“I am,” Isaacson replied.

As it turns out, Emmert’s day and a half on the stand did not yield any “gotcha” moments. He held his temper — something he hasn’t always done — refused to be baited by Isaacson, and stuck to his guns. The real evidence came from the plethora of emails and documents Isaacson was able to introduce.

Does amateurism violate antitrust law? Almost surely. When a cartel conspires to hold down wages, that is a classic restraint of trade. The question that United States District Court Judge Claudia Wilken is being asked to decide is whether the system the N.C.A.A. has created does so much good that it trumps any potential antitrust violation.

I know my answer to that question. I’m looking forward to finding out Judge Wilken’s answer.


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