Bob Schwartz

Category: Business

September 20, 2012

Mitt Romney Doesn’t Really Want To Be President


Mitt Romney doesn’t want to be President. This has been apparent for a while, but it seemed so unlikely—so strange for a person who is actually a nominee—that it defied saying. But it is the clearest explanation of everything that is happening.

Why would Romney run if he doesn’t want the office? The clichéd but useful explanation goes to a father-son dynamic.

In at least one objective respect, Mitt has spectacularly surpassed George Romney. Mitt Romney is a very, very rich man, wealthier than his father ever was.

As a businessman, it is a little more complicated. George Romney was, as the saying used to go, a captain of industry. He worked his way up to become head of one of the largest automakers, back when that mattered much more than it does now. Even if American Motors wasn’t one of the Big Three, it was a notable, forward-looking player in the field.

Mitt Romney’s success is different. Even treating the financial world as a discrete industry, which it of course is, the term “captain of industry” doesn’t seem to apply to Mitt. In the annals of financial history, no one will be talking about the creativity of Bain Capital the way business historians still do about the ahead-of-its-time thinking that marked American Motors—the company that believed the oversized car era was over, and that consumers would be buying compact and efficient automobiles. Eventually they would.

Politics is where the distinction is sharpest. George Romney was elected Republican Governor of Michigan three times—a state that was then decidedly Democratic. He had substantial political appeal and support, but his dream of being President was scuttled in part by the infamous “brainwashing” incident. He had visited Vietnam, and was told by the generals how well the war was going—in spite of evidence to the contrary. When he spoke about his opposition to the war, he said he had been “brainwashed” by the generals. George Romney’s political career never recovered.

As a politician, Mitt Romney has run for office just twice, and won only once. He was defeated for U.S. Senate from Massachusetts in 1994, and then was elected Governor in 2002. He chose not to run for re-election in 2006. Indications were that he would have a difficult race, and he instead began his run for the Presidency the day before he left office.

This father-son analysis—that Mitt Romney is trying, at all costs and for whatever reasons, to do what his father never could—may sound too easy. But the story of fathers and sons is just about the oldest story ever told. The patriarchal sagas of the Old Testament begin there, and great stories derive their greatness from the fact that some things never change.

Mitt Romney is following a program that he may not see or understand but that he has little or no choice about. It is a program, this running for President, that normally requires some combination of skill and desire. A surplus of one can balance out a deficit in the other. But trying to run without either—which we have never seen in a Presidential race—is bound to produce some anomalous results.

In the case of Mitt Romney, we can set aside the issue of how much political skill he has, though many have their doubts. The real question is how much desire he has. The answer, strangely, is little or none.

The outcome of the election is far from written. In case Mitt Romney loses, there is reason to believe that he will suffer some nagging psychic pain. But given the possibility that it is not something he really wants. there is also reason to believe he will go back to an extraordinarily comfortable life, and secretly be relieved.

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August 25, 2012

Movies: Force of Evil


The overlooked movie Force of Evil (1948)  is one of the most striking creative critiques of big business in any medium. It was produced by the major, decidedly capitalistic studio MGM, and it featured one of Hollywood’s biggest stars at the time, John Garfield, in what many consider his greatest performance. A standout of intelligent film noir, it has a brilliant and poetic script, written and directed by Abraham Polonsky.

Garfield is still a celebrated name in movies. Polonsky is more narrowly known, mostly among film historians. Shortly after Force of Evil, both Polonsky and Garfield were blacklisted in the craze of anti-Communist McCarthyism that swept the movie industry. Polonsky would not work again for twenty-one years.

There are two kinds of political movies. One is expressly and directly about political issues. The other kind—the one that so worried Commie-hunters—are films that look entertaining on the surface, but have a subversive and counter-cultural subtext. Force of Evil is a sort of third wave. You can watch it as a well-acted and engaging melodrama, which it is. But at some points, the politics explicitly but gracefully rises above subtext, in a way that is mostly undidactic, so it doesn’t get in the way of enjoying and appreciating the movie. It is quite a trick that Polonsky pulls off.

One of the archetypes of storytelling is the two brothers who end up on opposite sides of the law—Cain and Abel, the cop and the gangster. In this movie, both brothers are on the wrong side, just on a different scale. Leo is small-time, running a modest numbers betting business. (Numbers, sometimes called the policy racket, is an illegal lottery, long popular in low-income neighborhoods. Small bets are placed on the last three digits of the daily betting take at a race track; the odds are thus 1000 to 1.)  Joe (John Garfield), the younger brother who Leo helped put through Harvard Law, works for Ben, one of the biggest racketeers in New York.

Joe wants to make his first million, and he believes he will thanks to an ingenious plan to rig the outcome of the numbers on the Fourth of July. Since bettors often pick the numbers 776 on Independence Day, when that number comes up, the bettors will win for a change, but all the small-time numbers operators will go out of business, and be taken over by Ben. It is a strategy of forced, one-sided, underhanded mergers. (That’s right, the corrupt big business will play its dirty tricks on the slightly less corrupt small businesses—and on the innocent poor people—on the Fourth of July.)

Joe tries to save his brother by bringing him over to the bigger, richer and slightly darker side. But there are few heroes here. Events overtake characters, and in the end everyone, including a rival boss, is dead—except for Joe and the young woman he loves. While not exactly a happy ending, this outcome led some to complain that this sort of redemption was inconsistent with the rest of the movie. Maybe so, but this was made by one of the world’s biggest movie studios, and anyway, we all deserve a break in the face of this bleakness.

Bleak it may be, but Force of Evil is not some sort of dull lesson in ideology. It is a great, entertaining and rarely-seen film that deserves attention, whatever your politics.

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August 9, 2012

Should the U.S. Disguise Itself As An Emerging Market?

The term “emerging market” was coined in 1981 by Antoine van Agtmael. According to the Economist:

He was trying to start a “Third-World Equity Fund” to invest in developing-country shares, but his efforts to attract money were being constantly rebuffed. “Racking my brain, at last I came up with a term that sounded more positive and invigorating: emerging markets. ‘Third world’ suggested stagnation; ‘emerging markets’ suggested progress, uplift and dynamism.”

The term stuck, but like many neologisms, its meaning has expanded and shifted according to the times. The Economist suggests that it has outlived its usefulness:

Is it time to retire the phrase “emerging markets”? Many of the people interviewed for this special report think so. Surely South Korea, with sophisticated companies such as Samsung, has fully emerged by now. And China already has the world’s fourth-largest economy.

Whatever they are called, emerging markets continue to be prime targets for investment, with clear risks but enormous upside potential.

The U.S. is having problems getting investors to loosen their purse strings and flood our businesses with cash. Our economy is long past and beyond emerging; the perception among some is that it is post-post-emerged, which is to say a little old and over the hill.

That is a perception, not a reality, but perceptions matter as much in investment as elsewhere. So let us change the perception.

The proposal is to declare the U.S. an emerging market. There is a huge underclass just waiting for the means and opportunity to take their place in the middle. There is a middle class with upside potential of its own: although that potential is due to its having receded recently, potential is still potential.

Will investors be fooled by such a trick, what amounts to a name change and disguise? It wouldn’t be the first time. Anyway, as Antoine van Agtmael might say, “emerging market” sounds more positive and invigorating than “mired in recession.”

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July 25, 2012

Scissoring And Shunning Sheldon

Pay no attention, just for a moment, to the images above of billionaire Romney supporter Sheldon Adelson and to Sarah Silverman demonstrating the sexual act she would perform on him, if he agrees to instead give his money to Barack Obama.

The diversity of Jewish views on spiritual, social and political issues might be described as a crazy quilt that has never been pieced together. Or as a big tent without a ringmaster, no Pope to say what goes and what does not. This is admirable in some ways, but especially in stressed times, it can be uneasy and inconvenient.

Progressivism is a constant in Jewish thought and action, and just as constantly challenged by pragmatic and contrary considerations. The rise of Jewish neo-conservatism in America is a recent example, and the ready acceptance of Christian Evangelical support of Israel is another—paradoxical in that certain Christian eschatology clearly envisions the end of the Jewish people in Israel, at least as Jews.

Sheldon Adelson is taking this to a next step. He is using his unlimited campaign resources to target and convince Jews who may have mistakenly voted for Obama last time that only Mitt Romney and the Republicans offer a true Jewish vision of America and the world.

That’s where Sarah Silverman comes in. Having little by way of intellectual or humanistic argument to convince him, she offers to perform an exotic sex act on him,  if he will transfer to Obama the $100 million he has promised to use on behalf of Romney. We are going to hear a lot about bad taste, going too far, etc., but this is an indecent and brilliant piece of satire on many levels, worthy of tragic comic god Lenny Bruce.

Still, Sheldon Adelson is not going to take up this proposal. So here is another more decent one.

Even though Judaism has no final arbiter, outside of certain sects, this doesn’t mean that the Jewish communities are judgment-free. So while Sheldon Adelson can’t be “excommunicated” it can be made clear by other Jews that the agenda he is promoting with a tiny bit of his massive fortune does not represent Jewish ideals and that what he is doing is a schanda fur die goyim—a shame before the people and the nations.

Whether or not he gets scissored by Sarah Silverman, Sheldon Adelson should be shunned. There is no way to make it official, and even if there were the guess is that his billions could fix it. But conscience can’t be bought, any more than elections can (or that’s what we used to think anyway). Whether or not one is a Jew, let alone a “good” Jew, is something ultimately left to God and the individual. But that shouldn’t stop us from making clear that those who claim to act in the name of Judaism are not necessarily one of us.

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June 26, 2012

There Is No MAD In Politics


The Supreme Court decision in American Tradition Partnership, Inc. v. Bullock confirms that states like Montana must follow the rule of Citizens United and allow corporations the same political speech rights as individuals, including speaking money in elections.

War Games (1983) is a charming movie with a serious message. The charming comes from a young Matthew Broderick, playing a computer geek whose gaming nearly starts a global thermonuclear war. He is able to avert it, and the serious message for everyone is spoken by the computer: “The only winning move is not to play.”

When nuclear weapons were used for the first and only time in 1945, and it was obvious that portions of the world could be destroyed in an instant, responses followed.  There were moves to keep them out of the hands of “bad guys”, there were demonstrations to “ban the bomb” from everyone, there were attempts to limit and reduce the weapons that everyone eventually got.

And then there was the idea of Mutually Assured Destruction (MAD). It was simple: If anyone with those weapons could as easily be destroyed as they could destroy, it would be “madness” for them to strike. And as much as our deepest humanity wants to deny it, MAD is the reigning paradigm that has prevented nuclear weapons from being used even once in the almost seventy years since Hiroshima and Nagasaki.

In post-Citizens United politics, there is no MAD. There is worthwhile talk of disclosure, transparency and constitutional amendments to at least moderate the influence of corporate money in elections. But there is also a realpolitik sense that in the meantime those with the biggest weapons may well win. And the prospective winners have no worries about being destroyed by any opposing arsenal. That is why, understandably, the Obama campaign very quickly pivoted on the issue of Super Pacs. It was a matter of political survival.

MAD has saved us from blowing ourselves up. It is not available to save the politics of democracy. It is time for the most creative minds to figure out something beyond the virtuously obvious but ineffective. Whatever that might be.

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June 19, 2012

Elizabeth Warren And Native American Lending

Elizabeth Warren is a figure of considerable talent and successful public service. On the heels of a controversy that has been dogging her, though, an irony has cropped up that is worth a note in passing.

Even in a political season where the bizarre has become the everyday, Elizabeth Warren’s run for a U.S. Senate seat from Massachusetts has taken some strange turns. While her claim to Native American heritage is entirely legitimate, her handling of the politics surrounding it has been less than smooth. And now there is an unremarked upon twist to it.

You’ve probably seen television ads for the Internet lender Western Sky Financial. A pretty woman in braids looks you straight in the eye and offers you a personal loan. “Yes, the money is expensive,” she admits, “but it is a lot cheaper than a payday advance.” All the while, the Western Sky three-tipi logo is emblazoned onscreen, as a drum beats softly in the background.

The Western Sky site explains:

Western Sky Financial is owned wholly by an individual Tribal Member of the Cheyenne River Sioux Tribe and is not owned or operated by the Cheyenne River Sioux Tribe or any of its political subdivisions. Western Sky Financial is a Native American business operating within the exterior boundaries of the Cheyenne River Sioux Reservation, a sovereign nation located within the United States of America.

In an earnest section on Responsible Lending, Western Sky outlines its philosophy:

Fair Dealing among people is a Lakota Tradition, and a concept that is fully embraced by Western Sky. Fair Dealing requires parties to be open and honest and to treat others with respect. Western Sky believes Fair Dealing to be an important aspect of being a responsible Lender.

Western Sky seeks to employ the concept of Fair Dealing at all levels of customer relations, from the application process to the details of loan repayment. This page outlines our approach and what we ask you in return. If you have any questions regarding our commitment to Fair Dealing or our expectations of you, please feel free to ask.

Here are some of the loan rates:

Loan Product Borrower Proceeds Loan Fee  APR   Number of Payments Payment Amount
$10,000 Loan      $9,925          $75   89.68%        84              $743.49
$5,075 Loan       $5,000          $75   116.73%       84              $486.58
$2,600 Loan       $2,525          $75   139.22%       47              $294.46
$1,500 Loan       $1,000          $500  234.25%       24              $198.19
$850 Loan         $500            $350  342.86%       12              $150.72

Demand for easy but high-interest loans has skyrocketed in these hard times. In response to possible overreaching, a number of states that had previously kept their legislative hands off have jumped in to try and set some limits.

It appears that hundreds of Native American-related lending companies, including Western Sky, have cropped up to meet consumer demand. Despite state efforts to weigh in on this development, tribal sovereignty in the face of state laws has prevailed. In 2011 the Native American Lending Alliance  was formed to establish best practices and to make sure that sovereignty in this area remains intact and unassaied.

The only entity empowered to take on any question of tribal-related lending is the federal government. In recent years the federal government did generally take on consumer lending and related  issues with the establishment of the Consumer Financial Protection Bureau. But Native American lending is a legally complex and sensitive matter, and neither the federal government nor the CFPB is currently addressing it as frontline cause.

And that’s where the irony comes in. The CFPB is to a great extent the creation of Elizabeth Warren. She conceived it and helped build it. So at a time when Native American interests are operating just outside the purview and the spirit of the CFPB, Elizabeth Warren’s own Native American heritage has become a bit of a campaign issue.

The two have no direct connection, and all we know tells us that Elizabeth Warren always stands squarely on the side of consumers. But it is ironic: not a big irony, but certainly a curious twist in an endlessly curious and twisted political season.

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May 31, 2012

Money, Power & Wall Street: The Don’t-Miss Can’t-Watch Documentary

It is hard to recommend the four-part PBS Frontline documentary Money, Power & Wall Street and hard not to. Difficult as it is to watch the financial crisis unfolding, the film is superior even by Frontline’s high standard of excellence. As a history and prospectus, it is an insightful, even-handed and essential work of reporting. As a source of optimism, it is a complete failure, because the conclusion is that nothing has substantially changed, and that maybe nothing will.

It is as good as any disaster movie in pulling us in and moving us inexorably along. We see the scenes in detail, meet the cast of characters—lead and supporting actors—and have a growing sense of foreboding: this can’t end well.

It is different than most disaster movies in two ways. Most have some heroes, and with a few exceptions, there are no heroes here. And most disaster movies end with some movement toward rebuilding and reform, and with a sense of lessons learned: we will keep better watch for asteroids, we will build a system of asteroid warning and protection, we will come out this with a fundamentally better society. There is none of that here.

Yet Money Power & Wall Street has to be seen by every American. Those with political agendas will no doubt point to particular decisions or non-decisions, or particular actions or inactions, to prove a partisan point. But when they do, they will have missed the bigger point. In a world where financial forces become too big to understand or control, it is still our job as citizens and public servants to understand and control them. Because when it finally hits, ideologies and political badges are not really going to matter.

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May 16, 2012

MoneyDesignDigitalSex

Sometimes you stumble upon an item that perfectly embodies America, the 21st century, and America in the 21st century. All in a good way. This is from a company called Crave:

Our first product – DUET – was submitted for pre-release funding on international design funding platform CKIE.com in August 2011 where it raised $104,000 from over 950 backers – 694% of the original target. Word of DUET consequently spread across the web, which has effectively raised the profile of the product even before its official release, while also providing a springboard for further CRAVE products and developments.

Crowdfunding. Check. Design. Check.

But what exactly is Duet?

In a world where high technology and luxury design seem to touch every corner of our lives, the most intimate experiences should be no exception. The dominating culture in adult products often feels cheap and sleazy. We were craving something better: something beautiful, something discreet, something environmentally friendly, and something sophisticated. After all, if anything deserves good design, it’s the things we bring to bed with us.

Design, again. Check. Sex. Check.

But what exactly is Duet?

With dual motors and a V-shaped angle, DUET delivers powerful and precise vibration for external clitoral stimulation. The tip, inside edges, and outside edges provide slightly different intensities, while the flat surface is ideal for massaging the area around and on the clitoris. The dual motors’ unique ‘split at the tip’ combines with the four vibration patterns to enable a variety of sensations for you to explore…

Duet will let you how much charge remains when you turn it on. It will pulse one to four times – one pulse meaning 25% full, and four pulses indicating your DUET is 100% charged. When plugged into a USB port, a light indicator will blink to let you know your DUET is charging. The intensity of blinking will change depending on how close to being fully charged. With four vibration modes and four power levels, DUET gives you flexibility to find the perfect intensity and pattern. The settings have been designed to be easily altered at whim, but won’t accidentally change on you in the heat of the moment. Vibration modes include steady, dual pulsing, circular pulse, and wave.

Sex, again. Check. USB port??

Yes, this is Duet. A vibrator and a USB flash drive.

This is, without irony, the sort of creativity that makes America great. Purse-sized vibrators have long been around, as have flash drives. But this story that combines cutting-edge financing through crowdfunding, high-level design, digital capability, and, of course, sex goes well beyond bringing together chocolate and peanut butter. This is American genius.

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