Friday, November 28, 2003


There�s a story in today�s NYT about the trial that is replaying the Daimler Benz takeover of Chrysler . LI wrote a review of a book about that deal, so we take some interest and have some views. That the then CEO of Chrysler, a non-descript little egoist named Robert Eaton who basically resented the very smart crew of car designers and marketers that made Chrysler hot in the early nineties is going to have to testify about the inner workings of the thing will satisfy business watchers the way, say, forcing Iago to testify would have satisfied spectators in Venice. Kirk Kerkorian is the animating force behind the suit. Interestingly, Kerkorian wanted, in the early nineties, to take Chrysler private. He thought that the company had accumulated too much cash on hand � about eight billion dollars � and could pay out more to investors. Kerkorian is not our kind of guy � another sleazy billionaire buyout artist � but there was something to his offer. Unfortunately, he saddled the offer with the very unpopular notion that Chrysler should recall Lee Iacocca. Nobody thought Iacocca was a good idea � he was roundly disliked at Chrysler.
We were attracted by the end grafs, which compared the trial to a former trial.

�So who won one of the last times such titans met?

The Dodge brothers. They sued Henry Ford because he had cut Ford Motor's dividends and used the money to invest in new plants. The Dodges, who then owned about 10 percent of Ford, wanted to use the proceeds to finance an auto company bearing their name. Mr. Ford argued in court that business was about more than enriching shareholders, but about creating jobs and making products at a decent price.

"Ford lost," said Mr. Lewis, the historian. "On the other hand, he gained tremendously in public popularity."

The Dodge brothers built their own company, now a division of DaimlerChrysler.�

In the Automotive News this June, there was a little story about that trial which does a better job of talking about what the result of it was than to submerge it into the baby fat of celebrity culture (he gained tremendously in public popularity indeed). It is an interesting trial, because it exposed the historical dynamic that was operating to render the personally run corporation obsolete � the dynamic that led to what Veblen called absentee ownership.

The personal context of the trial was a Dreiser-like situation:

�The lawsuit represented bare-knuckle business brawling carried out with civilized tools. It was filed the day after Edsel Ford's wedding to Eleanor Clay; the Dodges had been guests at the reception. The lawsuit eventually put Henry Ford on the witness stand where canny lawyers made him look foolish. His beliefs in the way business was supposed to work were savaged and ridiculed.

Henry Ford was hurt by the accusations of cheating, but most of all, the Dodge lawsuit launched Ford's successful quest to bring ownership entirely within the family.�

Ford, losing the suit, responded with a two stage strategy. First, he resigned as President, leaving that office to Edsel Ford. Then he let it be known he was going to start a rival auto company. That fluttered all the hens in all the roosts of Detroit. The strategy abutted in a plan to buy out Dodge and other shareholders. Edsel�s independent board of directors was swept away. But this apparent victory over the trend towards the absentee run firm put Ford�s management in the hands of a man who could no longer manage the company: Henry Ford.

�On July 11, [1919] the Ford stock purchase deal was completed for a reported $106 million, $75 million of it borrowed from New York bankers. Henry, Edsel and Henry's wife, Clara, then held a total of 172,645 shares in a single, giant corporation.
Henry's moves had been successful, but his unchallenged dominance led to a strange and arbitrary management style rife with inefficiencies and damages that were not cleaned up until Henry Ford II and Ernest Breech took over.�

That we are re-playing these issues now will no doubt interest those who are wondering what direction the recent global corporate governance scandals are going to take the structure of the firm.

Wednesday, November 26, 2003


Bush�s medicare victory, today, underscores the schizoid split in American conservative thinking. Conservatives have a way of thinkiong about the private sphere: they think of it as a place populated by agents who are rational maximizers of their self-advantage. To unduly limit this tendency, as in socialism, leads to inefficiency, bureaucracy, and eventually the horrors of totalitarianism. So, how do conservatives think about the public sphere? In the conservative utopia, these economic self-advancers are to be led by agents who pursue self-minimalization. That is, the public sphere is supposed to be full of politicians shrinking government, and, insofar as the scope of government is a measure of their own power, abdicating their own power.

Both images of action are severely distorted. The supposed atomism of agents in the economic sphere doesn�t exist, or exists only by abstracting members of collectives, like families and businesses. Furthermore, other interests � most notably, interests of identity � are as strong, in the economic sphere, as pure self-advantage. While the later can be quantified in terms of money, the former is about status, values, and feelings that give rise to various complexly qualified symbols.

Then there is the conservative incoherence about politicians. There is nothing more attacked, in the conservative discourse, than the politician � and yet, for conservatism to succeed in its ostensible goals, they need a combination politician/saint. Such creatures exist few times in a century � Gandhi, Martin Luther King, Jr. Is it really coherent to believe that politican saints are going to govern, on a small government scale, the society in which the economic profit maximizers are rolling in opulence? The vestal virgins, we are to believe, will run the brothels, and the gates of paradise will open.

Well, there ain't any virgins on Capital Hill. The fact that government has mushroomed during the reign of Bush should come as no surprise. This time, we don�t hear any of the excuses we heard under Reagan�s terms � that is, that Congress just grew the budget, in spite of the Protestant ethic that Reagan was trying to enforce. That was a canard back then, and is now in the junkpile of forgotten excuses. The tendency of the state to grow should come as no surprise, given the intertwined interests of the Fortune 500 and the Bush campaign 500 � or the Tom Delay PAC 500. The Medicare bill is sloppy and dumb, but you know what? LI was affected by Clinton, after all. Dem senators should have voted for it. It is a platform. It can be used, in the same way that Nixon�s bureaucracies, like OSHA and the EPA, could be used.

However, that universal health care is and has been a liberal goal that this bill will, we think, bring closer doesn�t address the toxicity of the conservative incoherence in regard to spending and borrowing. The theory that Krugman has promoted, taking it from Nicolas Lehman, is that the Republicans intend to create a financial crisis that will result in a general abandonment of Government entitlement programs. I think Krugman is thinking, here, like an economist � that is, he is disregarding the difference between the conservative ideologues and the politicians. If we assume that the politicians are maximizers of their own self-advantage, we are not looking at a Master Plan � we are looking at a blind refusal to face up to the difference between rhetoric and reality. A better model for Republican politics than the Manchurian Candidate is the stock market boom of 2000. It is a politics of the Greater fool.

Tuesday, November 25, 2003


On August 31, we wrote about the sleazy, backscratching connection between Boeing and the Defense Department, with Darleen Druyun, who eased from the Pentagon to Boeing, leaving a trail of slime behind her, being the center of a controversy about Boeing's greedy lease to buy scheme. Yesterday, she was fired. Here are two grafs from the NYT article:

"Ms. Druyun, who was vice president and deputy general manager of the company's missile-defense business, is also being investigated by the Defense Department's inspector general over accusations that she gave proprietary financial data to Boeing about a competing aerial tanker bid from Airbus while she was still an Air Force official. She joined Boeing last January after having resigned from the Pentagon as a deputy assistant secretary the previous November.

"Boeing's action can be seen as an indication that it wants to get ahead of any government investigation into its actions and polish an image that has already been tarnished. In July, the Air Force withheld $1 billion in rocket launching contracts from Boeing and barred it from that business for 60 to 90 days after determining that the company had illegally acquired thousands of pages of proprietary documents belonging to the rival Lockheed Martin Corporation. It was the stiffest punishment imposed on any major military contractor in decades."


Last week, LI suffered from a runny nose, sneezing, fever, and headache. The usual. LI is allergic to something in Austin, as are most people who live in Austin. It is a cyclical thing: for me, October and March are bad times. There�s mold, cedar pollen, ragweed. Supposedly, cedar trees shed pollen when the temperature suddenly changes. I have to navigate with a bloodstream full of whatever is released from the cheap antihistamines I buy into my bloodstream when the temperature suddenly changes. The bitch of this is, the core bitch of this is, that autumn is the prettiest time in Austin. The skies are big and blue, the temperature is mild, the wind picks up in the morning, there�s an ache outside the window that makes you want to not be inside � and then to be sneezing violently throughout this. It seems so grossly unfair.

The Bulletin of the History of Medicine, everybody�s favorite journal, has an article in the Summer issue by Gregg Mitman on how, in the late nineteenth century, allergy sufferers among the upper classes would vacation in allergy free zones, like mountains. Allergy, mountain resorts, and the money to stay in them forms the nexus he examines in Hay Fever Holiday, Health, Leisure and place in Gilded Age America.

We went from Milman�s article, which names John Bostock as the first person to identify hay fever, on a search for information about this Bostock. Bostock rang no bells. So we looked up a Lancet article from 1993, which had some very interesting information about Bostock. Apparently, the kind of catarrhal dysfunction suffered by Bostock was very rare in the early nineteenth century. Bostock came from North England � significantly, one of the early zones of industrialization. The Lancet author uses Bostock, who believed his �summer colds� were temperature related, and another Northern English doctor, Charles Blackley:

�Bostock did not relate his condition to pollen but believed that its seasonal incidence was due to physical factors, possibly temperature. Charles Blackley, a physician in Manchester who also suffered from hay fever, collected some grass pollen in the summer and stored it in a bottle until the middle of the winter. He then removed the top of the bottle and inhaled the pollen. This immediately caused an acute attack with streaming eyes, running nose, and sneezing. This simple and elegant exeriment proved that hay fever was a sensitivity to pollen.

"These historical facts raise the question as to why the first accounts of hay fever and its mechanism came from two physicians from the north-west of England--which was at that time very far removed from the centres of medical excellence and academia such as London, Edinburgh, Paris, and Berlin. To this may be added the question as to why hay fever first appeared at the beginning of the 19th century. The most likely answer to both these questions relates to a third question--was there anything special about the north of England at the beginning of the 19th century? The obvious answer is the Industrial Revolution which began in this area and led to massive chemical pollution for the first time in human history. Chronic chemical damage to the nasal mucosa would facilitate the entry of pollen antigens, leading to immunological sensitisation.

"According to our current understanding hay fever is due to an allergy to pollen in sensitive subjects. The allergic or sensitivity state is manifested by a high IgE which is probably inherited as an autosomal dominant on chromosome 11q.(n8) This explanation does not, however, explain the rarity of the condition before 1800 or its greatly increased prevalence since; grass has been a feature of the landscape for many thousands of years. A genetic mutation leading to a raised IgE could not be the explanation because a mutation in 1800 could not spread to 10% of the population in less than 200 years. This paradox only becomes explicable if chemical pollution is entered into the equation, coincident with the Industrial Revolution in about 1800.

"Work in laboratory animals points to an interaction between allergens and pollutants such as SO2, NO2, O3, and vehicle exhausts. Thus exposure of guineapigs to ozone at 5 parts per million increases the likelihood of sensitisation and anaphylaxis after inhalation of an albumen aerosol.(n10) Intraperitoneal sensitisation of mice to Japanese cedar pollen occurs with concurrent administration of diesel exhaust-particles but not without��

Another fine mess this industrial revolution has gotten us into! Odd, really, that we put up with so much unnecessary misery in this civilization, all for the sake of our petro fix. Sneezers of the world, unite! You have nothing to loose but your prescriptions for stronger anti-histamines! Ratify that Kyoto treaty!

Monday, November 24, 2003


The Washington Post�s Sally Quinn profiles Ahmed Chalabi with the affection of a true D.C. insider. It is a profile that is heavy on the names of other D.C. insiders. As for the Iraqis, who are presumably going to be gifted, in Quinn�s opinion, with this amusing dinner guest, they don�t receive much mention. Quinn, of course, has the racism and snobbery inherent to her fragile hold on a doyenne�s position in what is, after all, an outrageously provincial town. The Post�s Style section belies the fact that the town has none. Hence for Quinn, the crucial question is who has the table manners. Being a hostess has given her an eye for these things. The Chalabis know how to use the salad forks � and can be forgiven for pocketing a few, especially if their pocketing is mostly confined to odious foreign money, Jordanians and whatnot. But as for the Iraqis, why, they just can�t be allowed to rule themselves. I mean, it is a look what the dogs brought in situation, mon cher. Here, for instance, is Quinn�s tres amusante description of a Council Member, Zebari, who obviously lacks Chalabi�s training in American table manners. In fact, Zebari brings out in Quinn those oily metaphors from her childhood that have died, in other places in this country, fifty years ago. The greasy Mexican, the wog, the buck nigger enjoying his melon � these are the figures that populate Quinn�s cramped mental space:
�After the Biden visit there is no time for a long lunch that Chalabi had planned, so it is decided that the Senate dining room will have to do. Both Chalabi and Zebari tuck their napkins into their collars. Zebari is fat and nervous, with eyes that dart around as if he can't believe he's here meeting with all these important people. Pachachi, on the other hand is tall, white-haired and elegant, with Old World manners, well traveled and totally comfortable in the corridors of power. According to Sethna, they've been worried about whether Zebari will know how to handle himself. "We're keeping our fingers crossed," says Sethna. "The foreign minister is new to this. He's not good in meetings with the senators."
It is clear that Zebari is not ready for prime time. After devouring his lunch, he has so many grease spots on his suit that he looks like he's had a head-on collision with a jar of olive oil. And this is before the White House meeting with Rice.�
The article is peppered with the usual WP habit of covering Iraq with complete inaccuracy. Quinn, for instance, quotes some poll about Chalabi�s popularity among Iraqis without bothering to source it, or consider the, uh, shall we say problem with taking polls in a war zone. And the article ends with a phone interview with Chalabi that is quite funny. Quinn, throwing in a novelistic patch, has earlier remarked that Chalabi lowers his eyebrows when he makes a self-flattering remark. Forgetting that she has just introed her penultimate grafs with: At midnight on Wednesday, after the U.S. reversal on the timing of sovereignty, Ahmed Chalabi was a happy man. "We made a deal," he exulted in a phone call from Baghdad,� she happily throws in her little novelistic technique: �And Chalabi is definitely optimistic about the future of Iraq. "Where we were and where we have gotten now is 80 percent of the road. I've had some influence," he added, lowering his eyelids, "but it would be foolish for one person to take the credit."
One wonders: does Chalabi say the last bit with a Peter Lorre accent?
Do read the article � it is such an unerring and unconscious parody of D.C.�s current radical right chic.

Sunday, November 23, 2003


George Packer is following in the footsteps of Robert Shaplen at the New Yorker. Shaplen wrote long pieces about Vietnam that every journalist read. Packer�s piece on Iraq in this week�s New Yorker is the same big picture reporting. It�s good. It�s also a bit confusing. Internal textual clues indicate that much of it was written this Summer, when the Coalition authority was doing fairly well, and it was finished off this Autumn, when that wasn�t the case. Packer takes a much more benign attitude towards the Coalition program than LI. However, it was the last couple of grafs that pinpointed our Iraq problem. Packer meets a U.N. official who was an aid to the late Sergio Vieira de Mello, killed in an explosion in September. The official warns against holding elections too soon, before the moderates can be organized.

LI is for those moderates. We�d love us some moderates. But elections aren�t about electing who you want � they are about the risk of electing who you don�t want. To think that the first elections should be rigged is, well, typical bureaucratic thinking. And, we fear, the idea working like a deathwatch beetle behind the panel of U.S. policy. What impressed me most about Packer�s reporting was not anything that was said or described, but something that Packer ignores. With an occupation that, as Packer pictures it, is so often clueless and out of touch, it is amazing that it isn�t being resisted more vigorously. It is a measure of the bankruptcy of Saddam�s Iraq that his supporters, the Ba�athists, can�t seem to take advantage of the American ineptitude. Why? Because they represent zip. They represent the pure rapacity of zip. While the Sunnis have the traditional fear of elites in unstable times, even the Sunnis know that going back to a sanction period for the sake of Saddam is unacceptable.

Unfortunately, I still don�t think the effect of the sanctions has been understood among the Americans, who view the devastation as some kind of condemnation of state-ism. The Iraqis understand very well that state-ism worked just fine in the seventies and into the eighties. That was when it stopped working fine. State-ism became aggression, which became unsustainable borrowing, which became defeat, which became sanctions. Americans are proposing a cure for the wrong disease when they make their favorite profound economic changes in Iraq. One of the ironies, here, is that these changes are going to come about, in a more moderate form, anyway, since no economy in the global system can no operate without them. Look at Iran � the student protests, recently, weren�t set off by the violations of democracy, but by the attempt to privatize some Iranian higher education.

However, by putting their greasy fingerprints all over these laws, Americans have probably increased the chance that they will be resisted or overturned.

Enough. Packer discovered that the Coalition Authority people were all going around reading big history books this summer. Among others, he mentioned Horne�s history of the Algerian war, which we just read. In that vein � we�ve been reading a fascinating, thick history by Philip Mansel. We highly recommend Mansel�s history of Constantinople, 1435-1923. His latest on these shores, Paris between Empires, 1814-1852, is irresistible. And it throws some light on occupations � after all, 1814 was the year the Cossacks watered their horses at fountains in Paris. We are gonna write about this in another post, soon. In the meantime, here are two grafs from the review of the book in the Economist in July, 2001. That slight British disdain for the foreigner � how it oozes through!

�You might think that writing about Paris between empires-between the fall of Napoleon I and the rise of his nephew, Napoleon III-is a slightly odd enterprise. The former made Paris the centre of European power; the latter, by transforming the city into a showpiece of modernity, turned it in the eyes of many into "the capital of the 19th century". But Philip Mansel demonstrates that Paris in decline had its peculiar attractions. As in Weimar Berlin, or Moscow and St Petersburg in the 1990s, or indeed like Paris itself in the 1950s, the collapse of power drew a picturesque crowd seeking social, artistic and financial opportunities.
From the Duke of Wellington down, the victors and their hangers-on came to spend their money on high and low adventures. Paris was cheap, so people who did not greatly count in London could make a splash. Successive French kings were anglophiles-perhaps genuinely and certainly politically-so British tourists could be courtiers for a day. The richer and more ambitious could buy splendid mansions from Napoleon's impoverished marshals and have the Comtesse Juste de Noailles draw up the guest lists for their parties.�


  “In brief, cultural history only represents a surface strike against the insight [of historicism], but not that of dialectics. For it lack...