Invention and Reinvention: The Evolution of San Diego’s Innovation Economy

Invention and Reinvention: The Evolution of San Diego’s Innovation Economy (Innovation and Technology in the World E) Paperback


Formerly prosperous cities across the United States, struggling to keep up with an increasingly global economy and the continued decline of post-war industries like manufacturing, face the issue of how to adapt to today’s knowledge economy. In Invention and Reinvention, authors Mary Walshok and Abraham Shragge chronicle San Diego’s transformation from a small West Coast settlement to a booming military metropolis and then to a successful innovation hub. This instructive story of a second-tier city that transformed its core economic identity can serve as a rich case and a model for similar regions.
Stressing the role that cultural values and social dynamics played in its transition, the authors discern five distinct, recurring factors upon which San Diego capitalized at key junctures in its economic growth. San Diego—though not always a star city—has been able to repurpose its assets and realign its economic development strategies continuously in order to sustain prosperity. Chronicling over a century of adaptation, this book offers a lively and penetrating tale of how one city reinvented itself to meet the demands of today’s economy, lighting the way for others.

Editorial Reviews


“Throughout my career in public office, I was conscious of the need for a good history about the dynamic south west corner of our state. Mary Walshok and Abe Shragge have captured a century and a half of San Diego history in a book that will ring true for anyone who has been engaged in its political and economic evolution over the last fifty years.”—Pete Wilson, Former California State Assemblyman, Mayor of San Diego, U.S. Senator, and Governor of California

“This is an important, pioneering book that contributes to our unique understanding of how one place, San Diego, has achieved what most places want: the capacity to evolve and meet the challenges of a constantly changing global economic environment. Walshok and Shragge help us understand why some places thrive while others wiither.”—David B. Audretsch, Indiana University and Author of The Entrepreneurial Society

“The San Diego region has long deserved a really comprehensive history of how its economy emerged from a primarily military and defense contracting town into one of the leading innovation regions in America. This book describes that journey and contains a number of insights that will be extremely useful to other regions that are trying to reinvent themselves.”—Richard Florida, Author of The Rise of the Creative Class, Director, Martin Prosperity Institute, University of Toronto and the Creative Class Group

“San Diego has a unique history in terms of its long relationship with the federal government, and especially the military, which this book captures superbly. Especially relevant is the discussion of the role that the research institutions on the Torrey Pines Mesa played in the transformation of the region’s economy. A wonderfully engaging book for anyone interested in trying to realize the social and economic benefits of basic research.”—Richard C. Atkinson, President Emeritus, University of California and Director, National Science Foundation 1977–1980

“Having been an early faculty member at the UCSD School of Medicine, a founder of Hybritech, and an investor in many of San Diego’s biotech companies, I am impressed with how well this book captures the dynamics shaping San Diego’s emergence as a world class science hub.”—Ivor Royston, Founding Managing Partner, Forward Ventures and Founder, Hybritech

About the Author

Mary Lindenstein Walshok is Associate Vice Chancellor of Public Programs, Dean of University Extension, and Adjunct Professor of Sociology at the University of California, San Diego. She is the author of Blue Collar WomenKnowledge Without BoundariesClosing America’s Job Gap, and co-editor of Creating Competitiveness. She is also a co-founder of CONNECT, a renowned innovation cluster development organization. Abraham J. Shragge received his Ph.D. in Modern United States History from the University of California, San Diego. He is a curator of the Veterans Museum and Memorial Center in Balboa Park and Coordinator of the San Diego Ex-Prisoners of War Oral History Project. Shragge is currently a Visiting Professor at the Korea Development Institute School of Public Policy and Management.

Why Samsung quietly cheers when Apple sells an iPhone

Why Samsung quietly cheers when Apple sells an iPhone

Eric Pfanner,New York Times | Jan 25, 2014, 02.12 PM IST

TOKYO: In the marketplace, Samsung Electronics and Apple battle for customers. In the courts, they fight over patents. Yet every time Apple sells an iPhone, Samsung quietly cheers, too.
In addition to being one of Apple’s main competitors, Samsung is one of its top suppliers. Samsung provides the application processor in the iPhone 5S – the brains of Apple’s flagship handset, and one of its most expensive components.
Because Samsung is not only the biggest maker of smartphones, but also a leading provider of parts to Apple and other gadget makers, company executives say they are confident that the electronics giant can work its way through a difficult period. On Friday, Samsung confirmed that it had sustained a sharp slowdown in sales growth and earnings in the fourth quarter of 2013 and warned that business conditions would remain challenging in the first half of this year. Apple’s sales have risen, and those gains have shored up Samsung by lifting the performance of its chipmaking business.
Samsung said that one-time factors were largely responsible for the fourth-quarter weakness. These included a special bonus totaling 800 billion won, or $740 million, that Samsung paid out to employees on the 20th anniversary of a management initiative to improve quality, as well as the effects of a surge in the strength of the South Korean currency, which Samsung pegged at 700 billion won.
“This kind of adjustment is normal for a high-growth industry,” said CW Chung, an analyst at Nomura, though he added that Samsung’s earnings could be “flattish” for the next two years.
Sales in the company’s mobile division fell 9% in the fourth quarter compared with the third quarter, it said, acknowledging that sales of high-endsmartphones had been weaker than expected. The premium segment, in which Samsung offers handsets like the Galaxy S4 and the Note 3, is the most lucrative part of the business, but analysts say it is increasingly saturated.
Samsung faces a renewed challenge from Apple, which introduced two new handsets – the iPhone 5S and a less expensive model, the 5C – in the second half of last year. Apple also recently reached agreements to distribute its phones via the largest mobile carriers in Japan and China.
While analysts said iPhone sales grew strongly after the latest models were introduced, with Apple regaining market share, Samsung’s chipmaking business shared the spoils. That unit posted a 7% quarter-on-quarter increase in sales, helped by “increased AP shipments for a competitor’s new product,” said Jee-Ho Baek, Samsung’s vice president of memory marketing, in a conference call with analysts. He was referring to application processors, and while he did not mention Apple by name, the allusion was clear.
Samsung’s mobile division provides about two-thirds of the company’s operating profit, but analysts expect that portion to decline in the coming years as the smartphone business matures. The chipmaking unit is expected to pick up some of the slack. That trend was already apparent in the fourth quarter, when the semiconductor division provided 24% of operating profit, up from 16% a year earlier.
Overall, Samsung posted net income of 7.3 trillion won, or $6.7 billion, up from 7.04 trillion won a year earlier but down from 8.24 trillion in the third quarter of 2013. Fourth-quarter sales of 59.28 trillion won were up from 56.06 trillion won a year earlier but flat compared with the third quarter of 2013. Operating profit, at 8.31 trillion won, was in line with a forecast issued two weeks ago.
The company said it expected weakness to persist in the first half of 2014, though it insisted that this was because of the “seasonality” of the technologyindustry, in which purchases are often deferred until later in the year.
While Samsung makes a wide range of consumer products other than phones, including televisions and home appliances, many of these have sluggish sales and low profit margins. Sales and earnings fell sharply in the display panel business.
Tablet computers are one area of promise, with sales and market share growing. Samsung executives said in the conference call that they were optimistic that new devices with larger screens would expand the tablet business further. The company also sees so-called wearable technology as a promising trend, though an early example, the Galaxy Gear smart watch, has gotten off to a slow start.
For now, that has left Samsung’s chipmaking arm to pick up most of the slack from the new softness in smartphones. Memory chips, which are recovering from a long price slump, are outperforming more complicated semiconductor devices like application processors. Samsung said memory chip sales had been bolstered in the fourth quarter by the introduction of new video game consoles like Sony’s PS4 and Microsoft’s Xbox One.
While Apple once bought other components, including screens, from Samsung, it has been moving to reduce its dependence on its South Korean rival. Still, Apple pays about $20 to $30 per phone for the iPhone application processors it buys from Samsung, estimated Sundeep Bajikar, an analyst at the brokerage firm Jefferies. That, he said, was about one-fifth of the overall parts bill for an iPhone.
Apple did not respond to a request for comment on reports that it planned to move production of application processors for its next generation of iPhones to the Taiwan Semiconductor Manufacturing Co. But Chung, the Nomura analyst, said he expected Apple to alternate contracts for application processors between Samsung and TSMC from now on.
There is a lot of business to go around. In 2013, Apple was the biggest buyer of semiconductors globally, spending $30.3 billion, according to IHS, a research firm. Samsung, which sources some of its chips internally, was in second place, spending $22.2 billion on outside semiconductor purchases, IHS said.
As chip technology improves more incrementally, Samsung is one of the few companies left with the financial wherewithal to make the investments needed for new generations of semiconductor equipment, analysts say. As a result, it could be in a strong position to gain business from other mobile phone makers, Bajikar said.
“Then Samsung will have greater control over the whole ecosystem,” he said. “The benefits of that could be enormous.”

Wisconsin’s Ice Caves Are Open For The First Time In Years, And They Look Incredible

Wisconsin’s Ice Caves Are Open For The First Time In Years, And They Look Incredible

JAN. 24, 2014, 4:21 PM 7,403 3

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You can thank the polar vortex for this one.

After being off-limits for five consecutive winters for safety reasons, the stunning ice caves of the Apostle Islands National Seashore in Lake Superior are officially open for seasonal gawking.

The 21-island park located off the coast of the northern tip of Wisconsin is a well-known summer kayaking destination that attracts visitors with colorful, winding caves and rock formations that protrude and dip along the water line.



In the winter, the seashore takes on an entirely different quality. As frigid weather takes its toll on the Midwest, massive stalagmites and stalactites form along the islands’ striated geology. Inside the caves, lake water freezes into smooth, icy floors that are as clear as a sheet of glass.

Visitors can reach the caves by walking about a mile across the frozen surface of the lake — when the ice is thick enough, that is.



Park officials monitor the ice conditions carefully, and the last time the ice was thick enough to venture safely out onto the frozen lake was in 2009. Luckily, after the past several weeks of Arctic-like weather, Lake Superior is now iced over enough to allow safe passage from the mainland to the caves.

For up-to-date information on the condition of the ice, be sure to check out Sea Caves Watch, which provides real-time webcam images and weather forecast information.

Unable to visit the frosty sea caves this winter? Here’s a visual taste of what you’ll be missing.









Famous Movie Quotes as Charts


Battle of the Box: Dropbox Vs Box


Ben Thompson

Monday, January 20, 2014 — Tweet this article

The problem with the old thin client model was the assumption that processing power was scarce. In fact, Moore’s Law and the rise of ARM has made the exact opposite the case – processing is abundant.

Data, on the other hand, is scarce – indeed, it is the scarcest resource in technology.

To be precise, I’m referring to personal data – my data, if you will – the opposite of “big data.” Were I to no longer have access to my various documents, pictures, emails, etc., I couldn’t simply walk into the store and pick up some more, and you couldn’t loan me yours. It’s precious, and it’s worthless, all at the same time.

Thus, over the last few years as the number of fat clients has multiplied – phones, tablets, along with traditional computers – the idea of a thin client with processing on the server seems positively quaint; however, in the context of our data, that is the exact model more and more of us are using: centralized data easily accessible to multiple “fat” devices distinguished by their user experience:

This is the niche Dropbox, which just raised $250 million at a $10 billion valuation, seeks to fill. In The Dropbox Opportunity, I argued that Dropbox’s business model gave them a key advantage vis–à–vis device/platform vendors like Apple:

Dropbox’s approach to my most important data is much more in line with the value I ascribe to that data: it’s available everywhere.

Not so for iCloud: data is available only on Apple devices, and it’s not exactly clear how to get it out…The only coherent strategy for Apple is a walled-garden of sorts that protects their vertical business model. A services-centric company like Dropbox, on the other hand, ought to pursue a horizontal strategy predicated on maximizing the number of interconnects with the layers above and below.

Today, though, I’m not so sure; Dropbox’s model makes sense theoretically, but it ignores the messy reality of actually making money. After all, notably absent from my piece on Business Models for 2014 was consumersoftware-as-a-service. I’m increasingly convinced that, outside of in-app game purchases, consumers are unwilling to spend money on intangible software. That is likely why Dropbox has spent much of the last year pivoting away from consumers to the enterprise.

There are multiple reasons why the latter is a more attractive target for all software-as-a-service companies, especially those focused on data:

Consumers need to be convinced of the value of their data – Despite the fact that data is precious and unique to each consumer, the vast majority of consumers don’t know or don’t care. Backblaze, the online storage company, found that only 10 percent of people backup regularly; I would imagine anyone reading this who has tried to convince friends and family to buy a $70 drive for Time Machine or similar is nodding wearily. While backup is not the primary use case for Dropbox, the broader point remains: before Dropbox can get a consumer to pay for their data service, said consumer needs to value data in the first place.

The situation is the exact opposite in the enterprise; data is what ties the entire operation together, and it’s difficult to imagine any company anywhere that is not intently concerned with its data even before you consider the various regulations around data safekeeping. It is much easier to sell something to someone who already knows they need what you have on offer.

Consumers have multiple free options – As I noted above, Dropbox’s horizontal orientation aligns their incentives with my need to have my data available anywhere. Most consumers, though, are much less likely to consider such intricacies when deciding where to put their data. Instead, convenience usually wins, and it’s more convenient to use iCloud, SkyDrive, or Google Drive on Apple devices, Microsoft devices, and Google devices respectively.

Enterprises, on the other hand, will never choose one of the free services offered by platform providers: the licensing terms are usually unacceptable, there is no guarantee of uptime, security is a significant concern, there is no top-down control, and there is no customization. Thus, while there may be competition on price within the enterprise space, that price will not be zero. It should be obvious that this makes monetization easier.

Consumers are hard to market to – Reaching the sort of scale to profit from consumers requires converting millions; if you consider how few consumers even know their data is important, and the fewer still that are willing to pay, that means the top of your consumer marketing funnel must be exponentially larger. This then requires a huge amount of money for advertising as well as an advertising message that is sufficiently broad and non-specific to appeal to your addressable market.

This is another stark difference with the enterprise, where most marketing is still done to a small group of individuals in the senior leadership of the company, particularly the CIO. Influencing just one person can result in many thousands of users; more importantly, the ability to actually sit down and have a conversation lets you more effectively tailor your message and sell your product.

For consumers, collaboration is an edge case – Most of the data that matters to consumers is for use by them alone; that’s part of what makes the data so valuable on an individual basis, but it also means collaboration and general sharing of files is only necessary every now and then. This reduces the perceived utility of Dropbox, making it even more difficult to monetize (particularly with the freemium option sufficing for any collaboration needs that do come up).

In contrast, what is an enterprise if not a collection of people and the data they jointly create and consume? Data belongs to the corporation, and by definition requires collaboration. Collaboration features, then, are a necessity, and the quality and ease-of-use of them is of primary importance. Any service that excels in this area is meeting a real need (and, as I just noted, the direct contact entailed with enterprise sales lets you explain these features clearly).

Building a platform for consumers is incredibly difficult – The natural evolution of a service like Dropbox – and one that justifies such a high valuation – is to be a platform on which other apps and services depend. The trouble with building consumer platforms is twofold:

The vast number of consumers necessitates a broad-based general-use platform, even as different consumers have specific use cases. The only way to overcome this is with massive developer support and mindshare

Many potential partners are not incentivized to support your platform. For example, the device makers may have a competing service; other partners, like say Gmail (for contacts), have different business models; still other partners may have your business-model but view the consumers dollar as a zero sum game given their general unwillingness to pay anything at all

While building platforms for the enterprise is no walk in the park, both of these challenges are reduced:

Because you are making specific sells to specific customers, you have more latitude to build custom solutions that directly meet consumer needs, which may only entail a few specific partners for a payoff of many thousands of licenses

Potential partners are, just like your competitors, paid offerings as well. This better aligns incentives. This is particular the case of other SaaS companies, which often still see a benefit in promoting SaaS in general, leading to win-win offerings that expand the pie for all. For example, Salesforce has made cloud promotion a central part of their pitch; this makes them more amenable to partnering with a storage cloud solution (as opposed to, say Gmail contacts)

Again, platforms are hard, but the incentives and obstacles in the enterprise are reduced; thus, the likelihood of seizing the potential upside is increased.

This is what is driving Dropbox’s pivot. Well, this plus the reality that Dropbox, according to the WSJ, only had revenues of ~$200 million last year, hardly enough to justify their 2011 Series B valuation of $4 billion, much less this weekend’s Series C valuation of $10 billion. To wit, over the last several months Dropbox has:

Poached execs from Salesforce, VMWare, and Google to lead enterprise sales

Hired an enterprise sales team en masse (take a look at Dropbox’s LinkedIn profiles; it’s hard to find a sales exec with tenure greater than six months)

Relaunched Dropbox for Teams, which offered basic group management options, as Dropbox for Business which allowed dual business and personal accounts and slightly more fine-grained administrator control

Waiting in the wings, though, is the company most often compared to Dropbox: Box. Aaron Levie figured out a full seven years ago that enterprise was a far more attractive market than consumer. From a profile in theMIT Technology Review:1

By 2007, Box’s user base had doubled 20 times over and annual revenue was around $1 million. But Levie felt uneasy. The price of hard disks was falling 50 percent every 12 to 18 months. As online storage became a commodity, what would stop Apple, Google, or Microsoft from giving it to customers free? He noticed that the customers who stuck around longest weren’t storing MP3s or JPEGs but Word, Excel, and PDF files. In other words, business customers. Moreover, their colleagues would follow their lead, generating a steady stream of new sign-ups. Levie decided to ditch the fickle consumer market and focus on serving enterprises, companies with thousands of employees, which would be willing to pay for a storage service tailored to their needs. He set about adding the capabilities required by large businesses: search, security, and the ability to create and delete accounts, manage file access, and grant permission to view, edit, or delete.

In other words, what we have here is one of the more interesting business experiments we’ve ever seen: is it better to have established a firm foundation in the top-down enterprise market that actually matters – i.e. Box – or to have built tremendous goodwill and customer loyalty with actual users – i.e. Dropbox?

Looking back at the five factors I identified above:

Box has focused on enterprises – who value data – a full six years longer than Dropbox. This means they have a much more full-fledged offering when it comes to features like user permissions, centralized control, etc.

Box has long been focused on paid accounts, not freemium

Box has an experienced sales team that has been an integral part of the company for years; Dropbox is catching up in sheer numbers, but not in cultural or product competency

Box has only ever been concerned with competing with paid options; Dropbox has a legacy freemium business to be concerned with

Box has spent years building up its platform capabilities; Dropbox has a nice hold on small scale developers but little else

On the other hand, Dropbox has a significant lead in registered users: 200 million (at last report) versus 20 million for Box, and many of those users are intensely loyal.

Box itself raised a new round of financing late last year – $100 million at a $2 billion valuation. The question, then, is if I had $10 million, would I prefer to invest in Dropbox or Box?

The decision is a close one:

At the most recent valuations, $10 million will get me 0.1% of DropBox, or 0.5% of Box.

Dropbox has a lot of retrofitting to do; in the consumer space, security and downtime concerns are of relatively less importance. You may lose customers, but they’re not very valuable on an individual basis. In enterprise, though, your uptime is usually guaranteed contractually, and data integrity is a precondition. I am very curious what this means for Dropbox’s reliance on Amazon S3 and shared files

I’ve previously argued that The Consumerization of IT is Overstated; consumer and enterprise products are increasingly similar, but business models aren’t – and business models matter

Thus, if I had the $10 million, I’d invest in Box. Unfortunately, I don’t, which gives me the luxury of sitting back and observing which matters more: consumer headway in a market where enterprise pays, or enterprise capability – and business model – with a smaller base.

May the battle begin.


25 American Classics Everyone Should Read At Least Once In Their Lifetime

25 American Classics Everyone Should Read At Least Once In Their Lifetime


JAN. 24, 2014, 2:56 PM 154,844 14

Not all of us paid attention in high school English class, but that doesn’t mean the assigned books weren’t worth reading (or re-reading).

And maybe it’s finally time to enjoy “The Grapes of Wrath” and other classics, instead of just the CliffsNotes version.

Miriam Tuliao, assistant director of central collection development at the New York Public Library, helped us create a list of 25 American classics everyone should read.

From John Steinbeck’s masterpiece to Jack Kerouac’s “On The Road,” these 25 titles are worth your time (listed here in alphabetical order).

Do you think another book belongs on this list? Let us know in the comments.

“A Tree Grows in Brooklyn” by Betty Smith

A Tree Grows in Brooklyn” is the heartwarming coming-of-age story of the young and idealistic Francie Nolan as she grows up in the slums of Williamsburg during the early 20th century.

An avid reader and lover of penny candy, Francie is a sweet and lovable narrator who must also face the horrors of life — battling sexual assault, extreme loneliness, and lost love — in an effort to survive (and prosper) despite her environment.

Buy the book here »

“The Adventures of Huckleberry Finn” by Mark Twain

Considered to be one of the great American novels, “The Adventures of Huckleberry Finn” follows Huck Finn and his friend Tom Sawyer as they travel along the Mississippi River and through the 19th century antebellum South with a freed slave named Jim.

It was the first book written in vernacular English, and though it’s frequently challenged for use in the U.S. public school system’s curriculum due to racial stereotypes and frequent slurs, many modern academics argue the book is an attack on racism.

Buy the book here »

“Atlas Shrugged” by Ayn Rand

The lengthy “Atlas Shrugged” is set in a fictional dystopian United States where all the world’s movers and shakers have abandoned society, leaving the world and the remaining people in a state of flux.

No matter your opinion on the underlying concept of the book — that capitalism is goodness itself — Ayn Rand’s philosophical book is considered by many to be her magnum opus and one need not agree with her to appreciate it.

Buy the book here »

“The Awakening” by Kate Chopin

One of the most boundary-pushing and feminist novels of its era, Kate Chopin tells the story of a Louisiana housewife who loses herself in an extramarital affair and yearns for independence from her husband and children.

Originally thought too provocative by the 19th century critics who panned the book, Chopin’s realism, depiction of female sexuality and questioning of societal expectations in “The Awakening” is why it remains a moving novel to this day.

Buy the book here »

“The Collected Poems of Emily Dickinson” by Emily Dickinson

Emily Dickinson was a true master of the English language, but she went largely unrecognized during her own time due to her idiosyncratic punctuation, capitalization, and vocabulary.

Though an introvert and recluse, Dickinson had a profound understanding of the human condition, and was able to write with a knowledge that one would not expect from a woman who later in life refused to leave her room. Today, she is known as one of the greatest poets in history with a corpus of nearly 1,800 poems.

Buy a collection of her work here »

“The Color Purple” by Alice Walker

In this Pulitzer Prize- and National Book Award for Fiction-winner, Walker paints the horrifying yet realistic account of a young black woman named Celie who faces disturbing abuse — both physical, mental, and incestuous — at the hands of the men in her life.

The Color Purple” is set in the southern U.S. in the ’30s, and follows Celie as she learns how to survive and let go of the past after discovering that she is somebody worth loving.

Buy the book here »

“The Crucible” by Arthur Miller

From the same Pulitzer Prize-winning playwright who wrote “Death of a Salesman,” “The Crucible” is another of Arthur Miller’s plays about the Salem witch trials of the 17th century.

It hit the stage in 1953, and was thought to be an attack on Senator Joseph McCarthy for his anti-Communist fervor and “witch hunts” of Communists in 1950s America. And though not entirely accurate, the play remains a timeless story of how intolerance and hysteria can tear a community apart.

Buy the book here »

“Fahrenheit 451” by Ray Bradbury

Fahrenheit 451” is set in a dystopian future where literature (and all original thought) is on the brink of extinction.

Guy Montag is a fireman whose job is to burn printed books as well as the houses where they’re hidden. But when his wife commits suicide and a young neighbor who introduced him to reading disappears, Guy begins hoarding books in his own home.

Buy the book here »

“The Fall of the House of Usher and Other Tales” by Edgar Allan Poe

Suspense writing gets no better than with Edgar Allen Poe’s tome of Gothic tales, and the “House of Usher and Other Collected Works” is a testament to that.

From the “Tell-Tale Heart” to the Sherlock Holmes-esque “The Murders in the Rue Morgue,” Poe is a master at building to a story’s climax with palpable emotions — terror, love, sadness — that feel undeniably real to readers.

Buy the book here »

“The Grapes of Wrath” by John Steinbeck

Winner of the National Book Award, Pulitzer Prize, and Nobel Prize, John Steinbeck wrote “The Grapes of Wrath” during and about the Great Depression that seized America in the 1930s.

The story follows a family of poor tenant farmers as they’re driven away from their Oklahoma home, and journey through the Dust Bowl toward California. But all of their hopes for redemption are slowly wiped out as they battle hunger, lack of employment, and death.

Buy the book here »

“The House of Mirth” by Edith Wharton

Edith Wharton’s “The House of Mirth” tells the story of class hierarchies in America through Lily Bart, a woman who sabotages all her possible opportunities for a wealthy marriage in the hopes of marrying for love, but refuses to marry for love because she is unable to give up her love of money.

Through a series of rumors and gossip, Lily slowly loses the esteem of her social circle, until she dies poor and alone. It was a stark illustration of the Gilded Age Wharton knew so well, and it remains profoundly tragic.

Buy the book here »

“How the Other Half Lives” by Jacob Riis

New York’s 19th century industrial workers lived in squalid, cramped tenement buildings. So journalist Jacob A. Riis made it his mission to show the American upper- and middle-class the dangerous conditions the poor faced every day with graphic descriptions, sketches, statistics, and his photographs.

Not only did “How the Other Half Lives” inspire tangible change to the Lower East Side’s schools, sweatshops and buildings, but it was also the basis for future “muckraking” journalism.

Buy the book here »

“I Know Why the Caged Bird Sings” by Maya Angelou

Maya Angelou’s “I Know Why The Caged Bird Sings” is a powerful American classic that tells of her struggles growing up during the Great Depression, and the abuse she suffered.

The memoir follows Angelou during her youth as she survives soul-crushing racism, a brutal sexual assault, and finally her hard-won independence as she becomes a young woman. Her poetic prose continues to influence and inspire generations today.

Buy the book here »

“Incidents in the Life of a Slave Girl” by Harriet Jacobs

This slave narrative was an in-depth chronological account of Jacobs’s own life as a slave, documenting in particular the horrific sexual abuse that female slaves faced: rape, pressure to have sex at an early age, being forced to sell their children, and the relationship between female slaves and their mistresses.

Though “Incidents in the Life of a Slave Girl” went relatively unnoticed at the time of its publication due to the outbreak of the Civil War, it reemerged in the 1970s and ’80s as an important historical account on the sexualization and rape of female slaves.

Buy the book here »

“Invisible Man” by Ralph Ellison

Winner of the National Book Award for Fiction, “Invisible Man” is a masterpiece that explores what it means to be black in America, as it grapples with race relations and misguided activist groups in the United States.

The book follows the nameless narrator as he tries to escape racist stereotypes from both the white and black people whom he meets in an effort to find his true identity and make others see him how he sees himself.

Buy the book here »

“The Jungle” by Upton Sinclair

U.S. journalist Upton Sinclair wrote “The Jungle” to raise awareness for immigrants in America by making the squalor and harrowing working conditions of Chicago factory life incredibly vivid.

The book galvanized public opinion and led to a forced government investigation that eventually caused the passage of pure food laws. Today, it’s often referenced in response to poor working conditions and food safety laws.

Buy the book here »

“Leaves of Grass” by Walt Whitman

Leaves of Grass” is a poetry collection that Walt Whitman spent his entire life revising and re-writing until his death. There are many versions of the book, from a small compilation of twelve poems to the final (gigantic) collection of 400 poems.

But all collections showcase Whitman’s staple free-verse poetry, which explores themes such as what it means to be an American, while still remaining accessible to modern readers.

Buy his deathbed collection here »

“Maggie: A Girl of the Streets” by Stephen Crane

Stephen Crane published “Maggie: A Girl of the Streets” at his own expense, and at the time it was considered a major failure for the well-known novelist.

Today, it’s said to be one of the first examples of American realistic novels. It tells the story of Maggie, a pretty girl born into — and ultimately killed by — the New York City slums of the 19th century. Maggie’s tragic fate pays homage to the true grit of life inside the tenement buildings.

Buy the book here »

“On the Road” by Jack Kerouac

Jack Kerouac’s unforgettable descriptions and truly original writing style soar in this novel about a pair of friends traveling across America.

A defining work of the postwar “Beat” culture, “On The Road” is both a physical and spiritual journey of the narrator who tries to find meaning in his life through his friends, lovers, and adventures around the U.S.

Buy the book here »

“The Portrait of a Lady” by Henry James

When the beautiful Isabel Archer is brought from America to Europe by her wealthy Aunt Touchett, she is expected to find a suitable match. But the stubborn Isabel almost immediately turns down two eligible suitors in a desire for independence.

However, the American heiress soon finds herself the target of a con by two American expatriates, and must struggle with a loveless marriage, cruelty, and intrigue in one of Henry James’ finest novels, “The Portrait of a Lady.”

Buy the book here »

“The Things They Carried” by Tim O’Brien

The Things They Carried” is the critically acclaimed collection of related stories about a platoon of American soldiers fighting in the Vietnam War, based in part on O’Brien’s own experiences.

A short-story collection, memoir, and novel wrapped into one, O’Brien takes his readers to the front lines with him, whether it’s trying to escape to Canada to avoid the draft, watching a friend die, or being welcomed home by people who have become strangers.

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“Their Eyes Were Watching God” by Zora Neale Hurston

Zora Neale Hurston is one of the preeminent U.S. writers of the 20th century. She was a major player in the Harlem renaissance, known for mastering beautiful imagery and local dialect in her work.

Their Eyes Were Watching God” is one of her best-known novels, following the life of Janie Crawford as she tries to discover herself through a series of marriages. The book is deeply moving as it confronts issues of female identity with the linguistic richness of 1930s Florida.

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“To Kill a Mockingbird” by Harper Lee

To Kill a Mockingbird” is the Pulitzer Prize-winning story of local attorney Atticus Finch and his children Scout and Jem as they grow up in a community divided by — and defined by — racism.

Based on Harper Lee’s own hometown of Maycomb, Ala., Finch is asked to defend an African-American man accused of rape, which sends the small Southern town into a frenzy and launches Scout and Jem into the center of the conflict.

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“Slaughterhouse-five” by Kurt Vonnegut

Billy Pilgrim is a man who has become unstuck in time after being abducted by aliens, specifically Tralfamadorians for their planet’s zoo. The book follows his capture, as well as his time as an American prisoner of war witnessing the firebombing of Dresden during World War II.

Slaughterhouse-five” is a comically-dark novel that combines both fantasy and realism, and is one of Vonnegut’s most masterful works.

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“Walden” by Henry David Thoreau

Henry David Thoreau’s “Walden” is an American masterpiece that is one man’s autobiographical attempt to find simplicity, self-reliance, and peace through solitude and nature.

Filled with allegorical metaphors and complex, insightful paragraphs, “Walden” shows what can happen when we strip life of its luxuries and go back to the “savage delight” of the wilderness.

Seoul mulls bankruptcy system for local gov’ts

2014-01-26 11:00

Seoul mulls bankruptcy system for local gov’ts

South Korea is considering introducing a bankruptcy system for highly indebted local administrations to make them more responsible for fiscal soundness, the home affairs ministry said Sunday.
Under the envisioned system, local administrations may be declared bankrupt when they are unable to pay back matured debts for 30 days or more, according to the Ministry of Security and Public Administration.
“The ministry began a study on introducing a bankruptcy system so that local governments will take greater responsibility for their finances,” a ministry official said.
The planned system is designed to enable local governments saddled with debt to recover their financial health and normally provide administrative services, he added.
But it is still undecided whether the central government will declare bankruptcy for financially troubled municipalities or allow local administrations to apply for insolvency, the official said.
In his New Year’s press conference, Hwang Woo-year, the chief of the ruling Saenuri Party, said the party may weigh the introduction of such a system as part of efforts to make local governments more financially sound.
However, experts said the ministry’s plan may face strong opposition because it could undermine the autonomy of local governments, the backbone of home rule. (Yonhap)

Growth of foreign investors in S. Korean stock market slows to 10-yr low

2014-01-26 11:02

Growth of foreign investors in S. Korean stock market slows to 10-yr low

The rise in the number of foreign investors in South Korea’s stock market slowed to a 10-year low last year, the financial watchdog said Sunday.
According to the Financial Supervisory Service (FSS), the number of foreign investors in the local market came to 37,611 in 2013, up 5.4 percent from the previous year.
Such a rise marks a continuation of recent increases, but the lowest on-year gain since 2003.
Of all foreign investors here, 26.3 percent, or 9,904, were individual investors with foreign businesses and institutions making up the rest.
Despite a rise in the number of foreign investors, the amount of foreign investment dropped significantly, apparently reflecting the waning popularity of the local market to foreign investors.
Foreign investors purchased some 4.72 trillion won (US$4.37 billion) worth of listed shares in South Korea last year, down 73.2 percent from 17.63 trillion won in 2012, according to the FSS.
As of the end of last year, American investors and firms owned some 171.35 trillion won worth of listed shares here, accounting for 39.6 percent of the total owned by foreign investors.
British firms and investors followed with 42.46 trillion won worth of shares, making up 9.8 percent of the total owned by foreign investors.   (Yonhap)

Steven Rattner: The Myth of Industrial Rebound

The Myth of Industrial Rebound

JAN. 25, 2014

Steven Rattner

WITH metronomic regularity, gauzy accounts extol the return of manufacturing jobs to the United States.

One day, it’s Master Lock bringing combination lock fabrication back to Milwaukee from China. Another, it’s Element Electronics commencing assembly of television sets — a function long gone from the United States — in a factory near Detroit.

Breathless headlines in recent months about a “new industrial revolution” and“the promise of a ‘Made in America’ era” suggest it’s a renaissance. This week, when President Obama gives his State of the Union address, he will most likely yet again stress his plans to strengthen our manufacturing base.

But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received.

In an article in The Atlantic in 2012 about General Electric’s decision to open its first new assembly line in 55 years in Louisville, Ky., it was not until deep in the story that readers learned that the jobs were starting at just over $13.50 an hour. That’s less than $30,000 a year, hardly the middle-class life usually ascribed to manufacturing employment.

This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.

With benefits added in, those workers cost Volkswagen $27 per hour. Consider, though, that in Germany, the average autoworker earns $67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).

All told, wages for blue-collar automotive industry workers have dropped by 10 percent, after adjusting for inflation, since the recession ended in June 2009. By comparison, wages across manufacturing dropped by 2.4 percent during the same period, while earnings for Americans in equivalent private-sector jobs fell by “only” 0.5 percent. (To be fair, including benefits, compensation for manufacturing workers remains above that of service employees.)

These dispiriting wage trends are a central reason for the slow economic recovery; without sustained income growth, consumers can’t spend.

Low wages are not the only price that America pays for its manufacturing “renaissance.” Hefty subsidies from federal, state and local government agencies often are required. Tennessee provided an estimated $577 million for Volkswagen — $288,500 per position! To get 1,000 Airbus jobs, Alabama assembled a benefits package of $158 million.

Now Boeing has just used the threat of moving to a nonunion, low-wage state to win both a record subsidy package — $8.7 billion from Washington State — and labor concessions.

Over objections from their local leadership, union workers approved a new contract that would freeze pensions in favor of less generous 401(k) plans, reduce health care benefits and provide for raises totaling just 4 percent over the eight-year term. (Boeing’s stock price rose by over 80 percent last year.)

FOR all the hoopla, the United States has gained just 568,000 manufacturing positions since January 2010 — a small fraction of the nearly six million lost between 2000 and 2009. That’s a slower rate of recovery than for nonmanufacturing employment. “We find very little real evidence of a renaissance in U.S. manufacturing activity,” a recent Morgan Stanley report stated, echoing similar findings from Goldman Sachs.

If anything, the challenges to American manufacturing have grown, as less developed countries have become more adept. In Mexico, where each autoworker earned $7.80 per hour in 2012, auto industry officials say productivity is as high as in the United States, where total compensation costs were $45.34 per hour. No surprise then that in 2013, Mexican automobile production was 50 percent higher than seven years earlier, while output in the United States was at the same 2006 levels.

For the United States to remain competitive against countries like Mexico, productivity must continue to rise. But unlike past gains in productivity, these improvements in efficiency are not being passed along to workers.

And these necessary productivity gains often take the place of hiring more workers; the United States remains the world leader in agriculture while employing less than 2 percent of Americans.

Advanced manufacturing — a sector that many advocate as a path for the United States to remain relevant at making things — also involves a high degree of efficiency, meaning not as many hires and particularly, not as many of those old-fashioned, middle-class, assemble-a-thousand-pieces jobs.

Moreover, the lead that the United States has in some advanced manufacturing areas — notably aerospace — is being compromised by growing capabilities of workers elsewhere. Bombardier is now assembling Learjets in Mexico, and later this year Cessna will start delivering Citation XLS+ business jets that were put together in China.

Similarly, while America’s energy boom will provide an incentive for manufacturers to locate here, don’t count on cheap natural gas to fuel an employment boom. According to a 2009 study, only one-tenth of American manufacturing involved significant energy costs.

While we shouldn’t expect manufacturing to save our economy, we needn’t despair. Among other things, we need to get over the notion that service jobs are invariably inferior. The United States remains a world leader in service industries like education and medicine. Not only do these fields generate well-paying jobs, but they also help with our balance of trade: when foreigners come to America to be educated or treated, those services are tallied as exports.

Manufacturing has been an emotional American touchstone since George Washington wore a wool suit that had been woven in Hartford, Conn., to his first inauguration to illustrate the importance of making stuff at home. We do need to maintain an industrial presence, but perhaps not for the obvious reasons.

For one thing, companies often locate research and development facilities — stuffed with high-paying jobs — near their manufacturing facilities. In addition to jobs, R&D yields high-value intellectual property that spills over into still more innovation and employment. And not surprisingly, every manufacturing position requires an additional 4.6 service and supplier positions to support it.

The challenge for the United States is particularly acute because manufacturing now accounts for just 12 percent of our economy, down from a peak of 28 percent in 1953 and on a par with France and Britain as the least industrialized of major economies.

While keeping that share from dipping further should be a priority, we should be careful to avoid raising false hopes (like Mr. Obama’s unrealistic second-term goal of creating a million manufacturing jobs) and pursuing ill-conceived policies (such as special subsidies for manufacturing).

The president’s proposals — unveiled over the last several years — include the two most important elements of a sensible manufacturing strategy: more training focused on the skills needed by employers and increased spending on research and development.

The United States work force is simultaneously overqualified (15 percent of taxi drivers are college graduates) and underqualified (we rank in the bottom half of many comparisons of developed countries).

When Volkswagen arrived in Chattanooga, it found that not enough eager applicants had the requisite technical skills, so it established a German-style training system (including three-year apprenticeships) at the factory.

As for research and development, the fiscal tightening by the federal government has prevented more investment in this critical area, the exact opposite of what is required. At the same time, while subsidies to draw jobs have become a necessary evil, we should be rigorous about analyzing the value of these costs. And we must stop short of excessive meddling in the private sector, and particularly the notion of picking winners. (Think Solyndra or Fisker.)

Mr. Obama skirted this problem by proposing to create 45 “manufacturing innovation institutes,” which bring together companies, universities and government experts in a kind of laboratory setting to help develop advanced manufacturing strategies.

While these institutes are not going to turn the tide, they might help at the margin. But like the president’s other proposals, they have been largely ignored by Congress. (The White House managed to establish a pilot center in Youngstown, Ohio, and another is coming in Charlotte, N.C.)

Manufacturing would benefit from the same reforms that would help the broader economy: restructuring of our loophole-ridden corporate tax code, new policies to bring in skilled immigrants, added spending on infrastructure and, yes, more trade agreements to encourage foreign direct investment and help get closer to Mr. Obama’s seemingly unattainable goal of doubling our exports.

Those who see a brighter manufacturing picture for the United States argue that wages are rising more rapidly elsewhere, not just in China and Brazil but also in Japan, Germany and France. But just like the “feel good” stories, celebrating this fact ignores the reality that the flip side of wages’ rising faster elsewhere means they are rising more slowly here.

And that is the essence of our challenge: In a flattened world, there will always be another China.

What Drives Success? Culture pushes some groups to achieve. We can learn from them

What Drives Success?


A SEEMINGLY un-American fact about America today is that for some groups, much more than others, upward mobility and the American dream are alive and well. It may be taboo to say it, but certain ethnic, religious and national-origin groups are doing strikingly better than Americans overall.

Indian-Americans earn almost double the national figure (roughly $90,000 per year in median household income versus $50,000). Iranian-, Lebanese- and Chinese-Americans are also top-earners. In the last 30 years, Mormons have become leaders of corporate America, holding top positions in many of America’s most recognizable companies. These facts don’t make some groups “better” than others, and material success cannot be equated with a well-lived life. But willful blindness to facts is never a good policy.

Jewish success is the most historically fraught and the most broad-based. Although Jews make up only about 2 percent of the United States’ adult population, they account for a third of the current Supreme Court; over two-thirds of Tony Award-winning lyricists and composers; and about a third of American Nobel laureates.

The most comforting explanation of these facts is that they are mere artifacts of class — rich parents passing on advantages to their children — or of immigrants arriving in this country with high skill and education levels. Important as these factors are, they explain only a small part of the picture.

Today’s wealthy Mormon businessmen often started from humble origins. Although India and China send the most immigrants to the United States through employment-based channels, almost half of all Indian immigrants and over half of Chinese immigrants do not enter the country under those criteria. Many are poor and poorly educated. Comprehensive data published by the Russell Sage Foundation in 2013 showed that the children of Chinese, Korean and Vietnamese immigrants experienced exceptional upward mobility regardless of their parents’ socioeconomic or educational background.

Take New York City’s selective public high schools like Stuyvesant and Bronx Science, which are major Ivy League feeders. For the 2013 school year, Stuyvesant High School offered admission, based solely on a standardized entrance exam, to nine black students, 24 Hispanics, 177 whites and 620 Asians. Among the Asians of Chinese origin, many are the children of restaurant workers and other working-class immigrants.

Merely stating the fact that certain groups do better than others — as measured by income, test scores and so on — is enough to provoke a firestorm in America today, and even charges of racism. The irony is that the facts actually debunk racial stereotypes.

There are some black and Hispanic groups in America that far outperform some white and Asian groups. Immigrants from many West Indian and African countries, such as Jamaica, Ghana, and Haiti, are climbing America’s higher education ladder, but perhaps the most prominent are Nigerians. Nigerians make up less than 1 percent of the black population in the United States, yet in 2013 nearly one-quarter of the black students at Harvard Business School were of Nigerian ancestry; over a fourth of Nigerian-Americans have a graduate or professional degree, as compared with only about 11 percent of whites.

Cuban-Americans in Miami rose in one generation from widespread penury to relative affluence. By 1990, United States-born Cuban children — whose parents had arrived as exiles, many with practically nothing — were twice as likely as non-Hispanic whites to earn over $50,000 a year. All three Hispanic United States senators are Cuban-Americans.

Meanwhile, some Asian-American groups — Cambodian- and Hmong-Americans, for example — are among the poorest in the country, as are some predominantly white communities in central Appalachia.

MOST fundamentally, groups rise and fall over time. The fortunes of WASP elites have been declining for decades. In 1960, second-generation Greek-Americans reportedly had the second-highest income of any census-tracked group. Group success in America often tends to dissipate after two generations. Thus while Asian-American kids overall had SAT scores 143 points above average in 2012 — including a 63-point edge over whites — a 2005 study of over 20,000 adolescents found that third-generation Asian-American students performed no better academically than white students.

The fact that groups rise and fall this way punctures the whole idea of “model minorities” or that groups succeed because of innate, biological differences. Rather, there are cultural forces at work.

It turns out that for all their diversity, the strikingly successful groups in America today share three traits that, together, propel success. The first is a superiority complex — a deep-seated belief in their exceptionality. The second appears to be the opposite — insecurity, a feeling that you or what you’ve done is not good enough. The third is impulse control.

Any individual, from any background, can have what we call this Triple Package of traits. But research shows that some groups are instilling them more frequently than others, and that they are enjoying greater success.

It’s odd to think of people feeling simultaneously superior and insecure. Yet it’s precisely this unstable combination that generates drive: a chip on the shoulder, a goading need to prove oneself. Add impulse control — the ability to resist temptation — and the result is people who systematically sacrifice present gratification in pursuit of future attainment.

Ironically, each element of the Triple Package violates a core tenet of contemporary American thinking.

We know that group superiority claims are specious and dangerous, yet every one of America’s most successful groups tells itself that it’s exceptional in a deep sense. Mormons believe they are “gods in embryo” placed on earth to lead the world to salvation; they see themselves, in the historian Claudia L. Bushman’s words, as “an island of morality in a sea of moral decay.” Middle East experts and many Iranians explicitly refer to a Persian “superiority complex.” At their first Passover Seders, most Jewish children hear that Jews are the “chosen” people; later they may be taught that Jews are a moral people, a people of law and intellect, a people of survivors.

That insecurity should be a lever of success is another anathema in American culture. Feelings of inadequacy are cause for concern or even therapy; parents deliberately instilling insecurity in their children is almost unthinkable. Yet insecurity runs deep in every one of America’s rising groups; and consciously or unconsciously, they tend to instill it in their children.

A central finding in a study of more than 5,000 immigrants’ children led by the sociologist Rubén G. Rumbaut was how frequently the kids felt “motivated to achieve” because of an acute sense of obligation to redeem their parents’ sacrifices. Numerous studies, including in-depth field work conducted by the Harvard sociologist Vivian S. Louie, reveal Chinese immigrant parents frequently imposing exorbitant academic expectations on their children (“Why only a 99?”), making them feel that “family honor” depends on their success.

By contrast, white American parents have been found to be more focused on building children’s social skills and self-esteem. There’s an ocean of difference between “You’re amazing. Mommy and Daddy never want you to worry about a thing” and “If you don’t do well at school, you’ll let down the family and end up a bum on the streets.” In a study of thousands of high school students, Asian-American students reported the lowest self-esteem of any racial group, even as they racked up the highest grades.

Moreover, being an outsider in a society — and America’s most successful groups are all outsiders in one way or another — is a source of insecurity in itself. Immigrants worry about whether they can survive in a strange land, often communicating a sense of life’s precariousness to their children. Hence the common credo: They can take away your home or business, but never your education, so study harder. Newcomers and religious minorities may face derision or hostility. Cubans fleeing to Miami after Fidel Castro’s takeover reported seeing signs reading “No dogs, no Cubans” on apartment buildings. During the 2012 election cycle, Mormons had to hear Mitt Romney’s clean-cut sons described as “creepy” in the media. In combination with a superiority complex, the feeling of being underestimated or scorned can be a powerful motivator.

Finally, impulse control runs against the grain of contemporary culture as well. Countless books and feel-good movies extol the virtue of living in the here and now, and people who control their impulses don’t live in the moment. The dominant culture is fearful of spoiling children’s happiness with excessive restraints or demands. By contrast, every one of America’s most successful groups takes a very different view of childhood, inculcating habits of discipline from a very early age — or at least they did so when they were on the rise.

In isolation, each of these three qualities would be insufficient. Alone, a superiority complex is a recipe for complacency; mere insecurity could be crippling; impulse control can produce asceticism. Only in combination do these qualities generate drive and what Tocqueville called the “longing to rise.”

Needless to say, high-achieving groups don’t instill these qualities in all their members. They don’t have to. A culture producing, say, four high achievers out of 10 would attain wildly disproportionate success if the surrounding average was one out of 20.

But this success comes at a price. Each of the three traits has its own pathologies. Impulse control can undercut the ability to experience beauty, tranquillity and spontaneous joy. Insecure people feel like they’re never good enough. “I grew up thinking that I would never, ever please my parents,” recalls the novelist Amy Tan. “It’s a horrible feeling.” Recent studies suggest that Asian-American youth have greater rates of stress (but, despite media reports to the contrary, lower rates of suicide).

A superiority complex can be even more invidious. Group supremacy claims have been a source of oppression, war and genocide throughout history. To be sure, a group superiority complex somehow feels less ugly when it’s used by an outsider minority as an armor against majority prejudices and hostility, but ethnic pride or religious zeal can turn all too easily into intolerance of its own.

Even when it functions relatively benignly as an engine of success, the combination of these three traits can still be imprisoning — precisely because of the kind of success it tends to promote. Individuals striving for material success can easily become too focused on prestige and money, too concerned with external measures of their own worth.

It’s not easy for minority groups in America to maintain a superiority complex. For most of its history, America did pretty much everything a country could to impose a narrative of inferiority on its nonwhite minorities and especially its black population. Over and over, African-Americans have fought back against this narrative, but its legacy persists.

Black America is of course no one thing: “not one or ten or ten thousand things,” as the poet and Yale professor Elizabeth Alexander has written. There are black families in the United States occupying every possible socioeconomic position. But Sean “Diddy” Combs — rapper, record producer and entrepreneur — undoubtedly spoke for many when he said: “If you study black history, it’s just so negative, you know. It’s just like, O.K., we were slaves, and then we were whipped and sprayed with water hoses, and the civil rights movement, and we’re American gangsters. I get motivated for us to be seen in our brilliance.”

Culture is never all-determining. Individuals can defy the most dominant culture and write their own scripts, as Mr. Combs himself did. They can create narratives of pride that reject the master narratives of their society, or turn those narratives around. In any given family, an unusually strong parent, grandparent or even teacher can instill in children every one of the three crucial traits. It’s just much harder when you have to do it on your own, when you can’t draw on the cultural resources of a broader community, when you don’t have role models or peer pressure on your side, and instead are bombarded daily with negative images of your group in the media.

But it would be ridiculous to suggest that the lack of an effective group superiority complex was the cause of disproportionate African-American poverty. The true causes barely require repeating: They include slavery, systematic discrimination, schools that fail to teach, employers who won’t promote, single motherhood and the fact that roughly a third of young black men in this country are in jail, awaiting trial or on probation or parole. Nor does the lack of a group superiority narrative prevent any given individual African-American from succeeding. It simply creates an additional psychological and cultural hurdle that America’s most successful groups don’t have to overcome.

At the same time, if members of a group learn not to trust the system, if they don’t think people like them can really make it, they will have little incentive to engage in impulse control. Researchers at the University of Rochester recently reran the famous marshmallow test with a new spin. Children initially subjected to a broken promise — adults promised them a new art set to play with, but never delivered — almost invariably “failed” the test (snatching the first marshmallow instead of waiting 15 minutes for a promised second). By contrast, when the adults followed through on their promise, most kids passed the test.

The same factors that cause poverty — discrimination, prejudice, shrinking opportunity — can sap from a group the cultural forces that propel success. Once that happens, poverty becomes more entrenched. In these circumstances, it takes much more grit, more drive and perhaps a more exceptional individual to break out.

Of course a person born with the proverbial silver spoon can grow up to be wealthy without hard work, insecurity or discipline (although to the extent a group passes on its wealth that way, it’s likely to be headed for decline). In a society with increasing class rigidity, parental wealth obviously contributes to the success of the next generation.

But one reason groups with the cultural package we’ve described have such an advantage in the United States today lies in the very same factors that are shrinking opportunity for so many of America’s poor. Disappearing blue-collar jobs and greater returns to increasingly competitive higher education give a tremendous edge to groups that disproportionately produce individuals driven, especially at a young age, to excel and to sacrifice present satisfactions for long-term gains.

THE good news is that it’s not some magic gene generating these groups’ disproportionate success. Nor is it some 5,000-year-old “education culture” that only they have access to. Instead their success is significantly propelled by three simple qualities open to anyone.

The way to develop this package of qualities — not that it’s easy, or that everyone would want to — is through grit. It requires turning the ability to work hard, to persevere and to overcome adversity into a source of personal superiority. This kind of superiority complex isn’t ethnically or religiously exclusive. It’s the pride a person takes in his own strength of will.

Consider the story of Sonia Sotomayor, who was born to struggling Puerto Rican parents. Her father was an alcoholic, she writes in her moving autobiography, “My Beloved World,” and her mother’s “way of coping was to avoid being at home” with him. But Justice Sotomayor, who gave herself painful insulin shots for diabetes starting around age 8, was “blessed” with a “stubborn perseverance.” Not originally a top student, she did “something very unusual” in fifth grade, approaching one of the smartest girls in the class to “ask her how to study.” Soon she was getting top marks, and a few years later she applied to Princeton — though her guidance counselor recommended “Catholic colleges.”

The point of this example is not, “See, it’s easy to climb out of poverty in America.” On the contrary, Justice Sotomayor’s story illustrates just how extraordinary a person has to be to overcome the odds stacked against her.

But research shows that perseverance and motivation can be taught, especially to young children. This supports those who, like the Nobel Prize-winning economist James J. Heckman, argue that education dollars for the underprivileged are best spent on early childhood intervention, beginning at preschool age, when kids are most formable.

The United States itself was born a Triple Package nation, with an outsize belief in its own exceptionality, a goading desire to prove itself to aristocratic Europe (Thomas Jefferson sent a giant moose carcass to Paris to prove that America’s animals were bigger than Europe’s) and a Puritan inheritance of impulse control.

But prosperity and power had their predictable effect, eroding the insecurity and self-restraint that led to them. By 2000, all that remained was our superiority complex, which by itself is mere swagger, fueling a culture of entitlement and instant gratification. Thus the trials of recent years — the unwon wars, the financial collapse, the rise of China — have, perversely, had a beneficial effect: the return of insecurity.

Those who talk of America’s “decline” miss this crucial point. America has always been at its best when it has had to overcome adversity and prove its mettle on the world stage. For better and worse, it has that opportunity again today.

Amy Chua and Jed Rubenfeld are professors at Yale Law School and the authors of the forthcoming book “The Triple Package: How Three Unlikely Traits Explain the Rise and Fall of Cultural Groups in America.”

Beijing’s Bad Air Would Be Step Up For Smoggy Delhi; India’s unusual mix of polluted air, poor sanitation and contaminated water may make the country among the most dangerous in the world for lungs

Beijing’s Bad Air Would Be Step Up For Smoggy Delhi


JAN. 25, 2014

NEW DELHI — In mid-January, air pollution in Beijing was so bad that the government issued urgent health warnings and closed four major highways, prompting the panicked buying of air filters and donning of face masks. But in New Delhi, where pea-soup smog created what was by some measurements even more dangerous air, there were few signs of alarm in the country’s boisterous news media, or on its effervescent Twittersphere.

Despite Beijing’s widespread reputation of having some of the most polluted air of any major city in the world, an examination of daily pollution figures collected from both cities suggests that New Delhi’s air is more laden with dangerous small particles of pollution, more often, than Beijing’s. Lately, a very bad air day in Beijing is about an average one in New Delhi.

The United States Embassy in Beijing sent out warnings in mid-January, when a measure of harmful fine particulate matter known as PM2.5 went above 500, in the upper reaches of the measurement scale, for the first time this year. This refers to particulate matter less than 2.5 micrometers in diameter, which is believed to pose the greatest health risk because it penetrates deeply into lungs.

But for the first three weeks of this year, New Delhi’s average daily peak reading of fine particulate matter from Punjabi Bagh, a monitor whose readings are often below those of other city and independent monitors, was 473, more than twice as high as the average of 227 in Beijing. By the time pollution breached 500 in Beijing for the first time on the night of Jan. 15, Delhi had already had eight such days. Indeed, only once in three weeks did New Delhi’s daily peak value of fine particles fall below 300, a level more than 12 times the exposure limit recommended by the World Health Organization.

“It’s always puzzled me that the focus is always on China and not India,” said Dr. Angel Hsu, director of the environmental performance measurement program at the Yale Center for Environmental Law and Policy. “China has realized that it can’t hide behind its usual opacity, whereas India gets no pressure to release better data. So there simply isn’t good public data on India like there is for China.”

Experts have long known that India’s air is among the worst in the world. A recent analysis by Yale researchers found that seven of the 10 countries with the worst air pollution exposures are in South Asia. And evidence is mounting that Indians pay a higher price for air pollution than almost anyone. A recent study showed that Indians have the world’s weakest lungs, with far less capacity than Chinese lungs. Researchers are beginning to suspect that India’s unusual mix of polluted air, poor sanitation and contaminated water may make the country among the most dangerous in the world for lungs.

India has the world’s highest death rate because of chronic respiratory diseases, and it has more deaths from asthma than any other nation, according to the World Health Organization. A recent study found that half of all visits to doctors in India are for respiratory problems, according to Sundeep Salvi, director of the Chest Research Foundation in Pune.

Clean Air Asia, an advocacy group, found that another common measure of pollution known as PM10, for particulate matter less than 10 micrometers in diameter, averaged 117 in Beijing in a six-month period in 2011. In New Delhi, the Center for Science and Environment used government data and found that an average measure of PM10 in 2011 was 281, nearly two-and-a-half times higher.

Perhaps most worrisome, Delhi’s peak daily fine particle pollution levels are 44 percent higher this year than they were last year, when they averaged 328 over the first three weeks of the year. Fine particle pollution has been strongly linked with premature death, heart attacks, strokes and heart failure. InOctober, the World Health Organization declared that it caused lung cancer.

The United States Embassy in Beijing posts on Twitter the readings of its air monitor, helping to spur awareness of the problem. The readings have more than 35,000 followers. The United States does not release similar readings from its New Delhi Embassy, saying the Indian government releases its own figures.

In China, concerns about air quality have transfixed many urban residents, and some government officials say curbing the pollution is a priority.

But in India, Delhi’s newly elected regional government did not mention air pollution among its 18 priorities, and India’s environment minister quit in December amid widespread criticism that she was delaying crucial industrial projects. Her replacement, the government’s petroleum minister, almost immediately approved several projects that could add considerably to pollution. India and China strenuously resisted pollution limits in global climate talks in Warsaw in November.

Frank Hammes, chief executive of IQAir, a Swiss-based maker of air filters, said his company’s sales were hundreds of times higher in China than in India.

“In China, people are extremely concerned about the air, especially around small children,” Mr. Hammes said. “Why there’s not the same concern in India is puzzling.”

In multiple interviews, Delhiites expressed a mixture of unawareness and despair about the city’s pollution levels. “I don’t think pollution is a major concern for Delhi,” said Akanksha Singh, a 20-year-old engineering student who lives on Delhi’s outskirts in Ghaziabad, adding that he felt that Delhi’s pollution problems were not nearly as bad as those of surrounding towns.

In 1998, India’s Supreme Court ordered that Delhi’s taxis, three-wheelers and buses be converted to compressed natural gas, but the resulting improvements in air quality were short-lived as cars flooded the roads. In the 1970s, Delhi had about 800,000 vehicles; now it has 7.5 million, with 1,400 more added daily.

“Now the air is far worse than it ever was,” said Anumita Roy Chowdhury, executive director of the Center for Science and Environment.

Indians’ relatively poor lung function has long been recognized, but researchers assumed for years that the difference was genetic.

Then a 2010 study found that the children of Indian immigrants who were born and raised in the United States had far better lung function than those born and raised in India.

“It’s not genetics; it’s mostly the environment,” said Dr. MyLinh Duong, an assistant professor of respirology at McMaster University in Hamilton, Ontario.

In a study published in October, Dr. Duong compared lung tests taken in 38,517 healthy nonsmokers from 17 countries who were matched by height, age and sex. Indians’ lung function was by far the lowest among those tested.

All of this has led some wealthy Indians to consider leaving.

Annat Jain, a private equity investor who returned to India in 2001 after spending 12 years in the United States, said his father died last year of heart failure worsened by breathing problems. Now his 4-year-old daughter must be given twice-daily breathing treatments.

“But whenever we leave the country, everyone goes back to breathing normally,” he said. “It’s something my wife and I talk about constantly.”

The Gadfly of Greenwich Real Estate; Amid dozens of unsold mega-mansions, a real estate agent sees a glut of greed

The Gadfly of Greenwich Real Estate


As he drives his white pickup truck past the manors that crowd the hills and meadows along Round Hill Road in Greenwich, Conn. — a town that has long signified what it means to be rich in America — Christopher Fountain snorts.

One of the gaudy estates is owned by a hedge fund kingpin now residing in prison; others belong to a real estate investor just coming out of prison and an investment adviser who steered his clients and their billions to Bernard L. Madoff. Then, to cap it off, a guy in an 8,000-square-foot mansion is charged with crushing his wife’s skull in with a baseball bat.

This is “Rogues Hill Road,” or so Mr. Fountain has called this 3.5-mile stretch of asphalt. “All these aspirational schnooks came out here thinking that they had really made it,” said Mr. Fountain, a real estate broker, blogger and lifelong Greenwich resident. “But then the tide went out and what you are left with is a bunch of crooks.”

Believe it or not, Mr. Fountain actually makes a living brokering mega-mansion real estate deals to these so-called schnooks, among others.

And his blog, For What It’s Worth, has attracted a cult following among those he lampoons — the financial titans who can afford to plunk down $5 million or more on a house but who nonetheless seem to appreciate his scabrous take on Greenwich residents’ run-ins with the law, debt-fueled implosions or plain old bad taste.

Indeed, Mr. Fountain would seem to spend as much time selling schadenfreude as houses.

The essence of his complaint — that decades of easy money and ceaseless greed have created a glut of unsalable houses that will remain a blight on his hometown for many years — highlights one of the more curious anomalies of today’s explosion in asset prices.

Though the Federal Reserve’s policy of rock-bottom interest rates over the last few years has revived the value of many of the nation’s subdivisions and sent stocks soaring to historic highs, it has prompted only modest interest in the over-the-top Greenwich mansion, a classic emblem of quick riches.

Mr. Fountain likes to point to the prominent Greenwich characters in the public spotlight as part of the problem. Topping Mr. Fountain’s list of homeowners are Raj Rajaratnam, the hedge fund executive now serving an 11-year prison sentence on charges of insider trading, and Frederic A. Bourke Jr., co-founder of Dooney & Bourke, the high-end handbag accessories store, who has just been imprisoned for bribery and whose house is on the market for $13 million.

He also likes to skewer Walter Noel, a founder of Fairfield Greenwich, the investment firm that raised more than $8 billion for Mr. Madoff and subsequently became the target of investigations. Mr. Noel’s 175 Round Hill address is just across the road from Mr. Bourke’s home. The estate of Steven A. Cohen, whose hedge fund pleaded guilty to insider trading charges in November, is six miles east of Round Hill Road.

Mr. Fountain includes in his gallery plenty of lesser-known people pushed into bankruptcy after overreaching, borrowing millions to build 15,000-square-foot houses that no one wanted to buy.

Mr. Fountain’s contention that the legal and financial troubles bedeviling Greenwich big shots have contributed to this slump — a view that is hotly disputed by his more established competitors — is more anecdotal than scientific. Still, the numbers are stark.

According to Trulia, the real estate website, the average price per square foot of a four-bedroom house sold in Greenwich in the last three months was $442, down 40 percent from a year ago and 11 percent from 2009.

Mr. Fountain says that more than 43 houses are on the market for at least $10 million — many of them unsold for more than a year.

What will it take to sell them?

“My rule of thumb now is divide the asking price by two,” he said. “Although the owner’s ego always makes that very hard to do.”

Mr. Fountain began to vent on his blog about two years ago.

“I’m sure Greenwich attracted some nefarious characters back in the ’50s and ’60s, but the past decade has seen just a parade of sad sack crooks,” Mr. Fountain wrote in a cri de coeur about how the 100-acre pastures and graceful mansions of his youth had been replaced by garish castles squeezed onto four-acre lots.

This was especially true, he felt, of Round Hill Road. “The road, to me, represents all that is sordid in our modern business world, money-grubbing poseurs putting on airs, until the handcuffs are slapped on.”

It is tempting to dismiss this as an old-money lament from someone who missed out on the past decade’s asset boom. While Mr. Fountain’s father rode the train into Grand Central every morning to a Wall Street job at White Weld, a white-shoe investment firm that is now defunct, his own career path has been rockier.

After practicing law in Bangor, Me., Mr. Fountain returned to Greenwich, where he spent most of his time defending small investors suing big Wall Street banks over dubious investment advice. He quit his job in 2000 after publishing his first book, “The New Millionaire’s Handbook: A Guide to Contemporary Social Climbing.” But his writing career stalled, and in 2001 he beat a retreat to selling houses. At the age of 60, Mr. Fountain has had three careers over the last decade and now rents a modest farmhouse in North Stamford, Conn., about 10 miles from Round Hill Road.

Nevertheless, his outbursts over new-money excesses in Greenwich have struck a vein, attracting readers who, Mr. Fountain says, include not just bankers and local real estate mavens but also followers in Europe and Asia. Cliff Asness, the billionaire hedge fund manager, has commented on the blog, and Mr. Fountain’s taste for Greenwich gossip makes him all the more appealing.

“Fountain is great,” said a defense lawyer for a legally encumbered Greenwich resident who has come in for punishment on the blog. “He is really catnip for all of us.”

One investment banker who recently used Mr. Fountain to sell and buy a house appreciates his forthrightness.

“If he thinks the house you are trying to sell is worth $1 million and not $5 million he will tell you,” said the banker, who spoke on condition of anonymity because his firm did not permit him to speak to the press. “Plus, his blog is hilarious.”

Much of it consists of his rightward-leaning libertarian and politically incorrect rants in which he mercilessly sends up — in equal measure — what he sees as the big-government vanities of the Obama administration and the arrogance of those who think they have arrived just because they could secure a $10 million mortgage.

With his raspy growl of a voice, his pickup truck and his trusty bow and arrow, which he deploys when deer-hunting season rolls around, Mr. Fountain might be as close as Greenwich comes to a redneck. And even if it is all a bit of an act, the shtick — selling real estate requires self-promotion of one kind or another — has been great for his business.

“The hedgies love me — it’s amazing how successful you can be if you tell the truth,” he said. “Last year was great, but it really kicked off when I started going on about Walter Noel and Rogues Hill Road.”

Still, in the competitive Greenwich market, where 1,000 people out of a population of 61,000 are licensed to sell houses, there are those who wonder if Mr. Fountain’s footprint is as big as he contends. While the $20 million in sales that he and his business partner generated in 2012 put him in the top tier of the local broker pool — 2013 was a harder slog, he says — some rival agents say his presence was hardly felt in previous years.

They also reject his assertion that the market for big-ticket houses is in terminal decline.

“It really bothers me when he talks about the market like this because it is just not true,” said David Ogilvy, the longstanding dean of the mansion market in Greenwich, who also has suffered his share of pokes on the blog.

To prove his point, Mr. Ogilvy ticks off his firm’s sales in recent months: $13.4 million, $14.5 million, $24 million.

But other real estate agents say large houses often sell for far less than the asking price these days.

“This is still a buyer’s market,” said W. Harry Pool, a longtime investment banker turned real estate broker at Halstead Property in Greenwich. “If you want to sell your $10 million house, you really have to have the best $10 million house out there.”

When he is not hunched over a laptop or in pursuit of deer, Mr. Fountain spends most of his days cruising around town in his pickup.

“I mean this is insanity — it’s just a garish pile of bricks,” he growled in the fall, as he drove past yet another 10,000-square-foot, slightly worse for wear and quite empty house. Like so many of its ilk, the house had been slapped together in a few months by a highly leveraged speculator; unable to pull in the $9 million needed to clear his debts, he had to surrender it to the bank.

And who signed off on the mortgage? “Patriot Bank, of course,” Mr. Fountain said, spitting the words.

Of the many that have suffered a whipping from Mr. Fountain over the years, few have been subjected to as much sustained abuse as Patriot National Bank, the small regional lender that is based nearby, in Stamford, and bankrolled some of Greenwich’s most egregious mortgage disasters.

“Patriot was in a pretty bad place when we took over,” concurred Michael A. Carrazza, whose investment firm, Solaia Capital Advisors, rescued the bank in 2010 and restored it to good health. About one-third of the bank’s loan portfolio, he said, consisted of nonperforming loans belonging to those owning high-end houses in and around Greenwich. Many of the loans went to highflying Wall Street titans, but a surprising number were directed to other borrowers, like Jianhua Tsoi, an acupuncturist and aspiring artist, who borrowed $40 million to build at least five houses in and around Greenwich, few of which he was able to sell.

Another Patriot borrower was Dominick DeVito, a builder and renovator of big homes who, when he took up residence on Round Hill Road in 2005, had already served a term in prison for real estate fraud.

After a profitable run, he became overextended, borrowing $6 million from Patriot in 2006 to build and flip his most spectacular house yet.

When the market collapsed, Mr. DeVito’s bankers got cold feet, shut down his credit line and took possession of his nearly completed house. In 2009, he was sent to prison again on mortgage charges related to his earlier real estate activities in New York.

That Mr. DeVito — an Italian-American kid from the rougher side of Eastchester, N.Y., and with no college education — would end up on Greenwich’s most prestigious thoroughfare is in itself a bit of a curiosity.

“I mean I was a paint contractor,” said Mr. DeVito in an interview last year, as he took in the swimming pool, the rolling green hills and the white picket fence from the front porch of his house. “Now I am on Round Hill Road?”

Since his release from prison in early 2013, Mr. DeVito has jumped back into the real estate game with a vengeance — plying the back roads of Greenwich in search of unloved mansions that he might snap up, tear down and sell for a profit.

“I am done with the banks, though,” he said. Instead, he is looking to rich people in Greenwich to put up the cash, with profits to be split down the middle.

“I mean,” he said with one of his signature, flashing white grins, “it’s not rocket science, is it?”

For the Wall Street types, however, headline-grabbing failure is harder to brush off.

Consider Joseph F. Skowron III, known as Chip, whose $8 million house is on 16 Doubling Road, just a few miles east of Round Hill Road. A hedge fund investor, he was caught in 2011 doling out envelopes of cash in return for nonpublic stock tips and was sent to prison for five years. Once worth around $20 million, he left behind a wife, four small children and a garage once full of high-end sports cars.

Having already paid $7.7 million in fines to the United States government, Mr. Skowron was ordered last month to pay $24 million in past wages — beyond the $10 million he has already paid to his former employer, Morgan Stanley.

When a guy named Chip, with a dimple in his chin and a luxurious home on the edge of the local country club, commits and then admits to an egregious financial crime, the knives come out quickly.

“How warped can a guy get just to accumulate a 10-car collection of speedsters and a big Greenwich house,” wrote Mr. Fountain on his blog late last year, no doubt exaggerating the number of cars Mr. Skowron owns. “He now has plenty of time to ponder that question. Chump.”

Peter Tesei, the town’s first selectman, is quick to point out that a vast majority of Greenwich’s 61,000 residents are citizens in good standing. But even some of those have their pasts. And perhaps no one is better qualified to add a bit of heft to Mr. Fountain’s thesis than David A. Stockman, who was the budget whiz kid of the Reagan administration.

In his 712-page book, “The Great Deformation,” Mr. Stockman argues that the relentless money-printing of the Federal Reserve has created a pernicious cycle of greed and excess.

“This is just not sustainable — the bubbles are getting bigger and the busts are becoming more traumatic,” Mr. Stockman said. “And with each subsequent reflation the wealth and income is flowing into a smaller set of hands at the very tippy-top of the economic ladder.”

Mr. Stockman speaks from experience.

In the 1990s, he was a top executive at the private equity shop Blackstone and erected a 15,000-square-foot estate in the gated Greenwich community of Conyers Farm.

When the debt bubble burst in 2007, Mr. Stockman’s final private equity play — a car parts supplier — failed spectacularly. Federal prosecutors charged him with fraud but withdrew the case two years later.

In 2012, Mr. Stockman put his trophy home — with its 11 bathrooms, swimming pool and tennis court — on the market, asking $19.75 million.

Weak as the market was, the listing was removed — and Mr. Fountain is not surprised.

“For $9 million, it’s a nice little house,” he said. “But these types of houses don’t age well. There is just too much horse crap out there on the polo fields.”


The Danger in Bespoke Funds: Many offer lots of leverage on the way up, but also on the way down


The Danger in Bespoke Funds


Many offer lots of leverage on the way up, but also on the way down.

Call it the rise of the bespoke exchange-traded fund. These days, in a shift from general-interest ETFs, a large institutional investor can identify a hole in its portfolio, and presto, the investing public gets a brand-new specialized fund. But while these custom-crafted strategies might be a perfect fit for one investor, they could be a lousy fit for you.

A single buyer showed up for the lion’s share of several of last year’s biggest ETF launches: Ken Fisher’s Fisher Asset Management owns 97% of two recently christened Barclays exchange-traded notes. Similarly, the Arizona State Retirement System invested $100 million in each of four iShares “factor” ETFs—funds focused on one factor, such as value or momentum. Big, professional investors are more comfortable than ever owning ETFs, and fund makers love this because it helps them rake in the money, notes S&P Capital IQ analyst Todd Rosenbluth.

Complexity is one hallmark of these funds. Take Barclays’ $1.4 billion ETN+FI Enhanced Global High Yield ETN (ticker: FIGY), majority-owned by Fisher. It uses a complex formula for leveraged returns on 24 countries’ stocks. But the leverage varies over time, and there’s a screen to remove undesired stocks. “Our size and scope allow us to do this,” says a Fisher spokesman, citing the firm’s thesis on growth stocks and benefits like strong liquidity. If investors chase the ETN’s recent returns–the three-month rise is ahead of the MSCI EAFE index’s—they risk getting crushed by leverage in a selloff. But what hurts you might not hurt Fisher nearly as badly. The ETN is less than 3% of the firm’s assets under management. Individuals’ bets would probably be bigger, because their portfolios get unwieldy when allocations are too small. A Fisher spokesman cautions against comparisons, but adds that “there are certainly economic benefits to size in this area.”

The best-known custom-ETF craze followed a revamp of an existing strategy: the yen-hedged Japan fund. In 2012, firms including RiverFront Investment Group hatched the idea of tweaking the WisdomTree Japan Hedged Equity ETF (DXJ) in favor of yen-sensitive stocks, on the theory that they’d fare best in a monetary-policy shift. The plan was well timed: Exporters were enviably positioned for Abenomics. The yen plunged, Japanese stocks soared, and the ETF surged 42% in 2013. Assets under management ballooned to $13 billion.

Were there suddenly so many investors with nuanced views of Japan—or were they just jumping on the bandwagon? “Make sure you’re doing your homework,” cautions Chris Konstantinos, a RiverFront manager. Any selloff would be a double whammy for the ETF because investors would sell stocks and crowd into yen.

Are you more eager on Japan than RiverFront? The firm’s most aggressive strategy, a global growth portfolio, has a 12% Japan weighting. A more conservative strategy has 5.5%. If your exposure is bigger, you’re outbulling the bulls. “Japan is my highest-conviction idea,” says Konstantinos, “but we’re not putting all our eggs in that basket.” Also, RiverFront’s aggressive strategy uses 32 ETFs; its annual portfolio turnover is 75%. Most individual investors can’t be so tactical.

You might win for a while chasing the big guys’ returns, but it’s more likely you’ll churn—and you may well get burned. Chances are these highly specialized ETFs are a better, safer fit for someone else’s portfolio.


Agonizing Choices for Lives Saved by Miracle Drugs

Agonizing Choices for Lives Saved by Miracle Drugs


Updated Jan. 24, 2014 10:33 p.m. ET


Megan’s mother, Aileen, lifts her into bed from her wheelchair after school. Lexey Swall for The Wall Street Journal;Seven months ago, Megan Crowley made a gutsy decision: to undergo a radical surgery to straighten out her spine, which has been crippled by Pompe disease. Photo: Lexey Swall

PRINCETON, N.J.—Sixteen-year-old Megan Crowley lay facedown on an operating table last June as her surgeon tried to straighten her spine, badly contorted by a genetic disease that nearly killed her as a little girl.

The doctor had warned Megan that she stood a 5% chance of dying from the risky surgery, but she eagerly chose it anyway. Her 15-year-old brother Patrick, stricken with the same rare disease, refused the procedure and awaited news of her at home.

In the operating room, an alarm suddenly blared: Megan’s nerve signals had flatlined, suggesting paralysis. “Megan, wiggle your toes!” her surgeon, David Roye, recalls yelling, waking her from anesthesia. She tried, to no effect.

Megan’s and Patrick’s choices are the kind of agonizing ones now confronting a generation of Americans like them whom biotech breakthroughs have kept alive—but haven’t fully cured.

The two have Pompe disease, which progressively weakens muscles. Until about a decade ago, heart failure killed most babies with Pompe within a few years.

The siblings’ fate turned in a remarkable family drama: Their father saved their lives by helping develop a drug that restored their hearts, a story told through several Wall Street Journal articles since 2001.

But the drug couldn’t stop Pompe (pronounced pom-pay) from degrading Megan’s muscles. By her freshman year at Princeton High School, she needed a respirator and wheelchair. She couldn’t speak clearly or smile. Her spine bent about 100 degrees.

Dr. Roye offered a risky and painful way to help Megan sit up like other kids. “I would drill screws into your vertebrae,” he told her, “and put rods in to anchor them to your ilium,” or hip bone.

Children like Megan and Patrick, having survived once-fatal rare diseases, often must decide again and again as they grow older whether to endure interventions for their diseases’ complications.

These procedures can bring a better or longer life. They also can be excruciating and, even when successful, can leave the patient waiting for breakthroughs for disabilities that remain.

Some patients decide intervention just isn’t worth the agony. Patrick also lives on a respirator with a bent back, and his muscles continue to degrade. But he refuses operations.

“No!” he screams when asked in an interview if he would consider spinal surgery.

“It’s been hard for us sometimes, and we’ve struggled with it,” says their father, John Crowley, of their choices. “But we’ve learned to accept that what makes sense for each kid is different,” he says. “We realize the risk-benefit for Patrick.”

Thousands with other once-fatal rare diseases confront lifetimes of such risk-benefit decisions. Hundreds in the U.S. with Fabry disease, which leaves patients with severe heart and kidney problems, are alive thanks to a treatment developed in 2003. But they face decisions about surgery for continued complications.

So do patients who previously would have died of Hurler-Scheie Syndrome and Hunter Syndrome. New treatments have saved lives, but patients often remain disfigured and suffer spinal compression. They confront difficult decisions about whether to undergo procedures such as spinal-fusion surgery.

People with Gaucher disease, which causes crippling bone pain, can live longer and with fewer symptoms thanks to biotech drugs first developed in 1991. But for some, the disease continues to turn their bones brittle, forcing them to decide whether to undergo painful joint surgery.

“They face an ongoing series of new challenges and unknowns that we never envisioned when we developed these therapies,” says Priya Kishnani, chief of medical genetics at Duke University Medical Center. “They’re alive and they want us to help them decide when enough is enough. Who am I to judge?”

Roughly 1,000 people are on a Pompe drug in the U.S. and face many of the choices Megan and Patrick do.

Megan, who turned 17 last month, was diagnosed with Pompe at age 1 in 1998. Tests revealed her body made a defective version of an enzyme that digests sugars in muscle cells. Those sugars built up, disrupting cell function.

Doctors diagnosed Patrick with Pompe a few months later. Mr. Crowley and his wife, Aileen, are healthy. But both carry a mutation in the same gene, giving their children a 25% chance of developing Pompe. Their eldest son, John Jr., 19, doesn’t have it.

In 1998, there was no treatment for Pompe. When doctors told Mr. Crowley the children had few years to live, he quit his job as a drug-company executive and started a biotech firm to seek a treatment.

He succeeded. In 2003, Megan and Patrick, then 6 and 5, began receiving the medicine their dad helped develop. It kept their hearts from failing.

But Pompe continued to weaken other muscles. During early elementary school, they were strong enough to sit up. Their spines started to sag by age 9. They “puddled” into their wheelchairs, Dr. Roye says.

As Megan’s body bent, her left lung compressed at age 11, making it harder to breathe and speak. Patrick suffered similar symptoms.

The siblings faced their disabilities differently. Despite her spine’s collapse, Megan whizzed around school in her hot-pink electric wheelchair. “She wants people to know she’s there,” says her homeroom teacher, Julie Dunham. “She bedazzles with her spirit and personality and her desire to achieve.”

Patrick, more sensitive to curious staring, shunned crowds and social events, retreating to his bedroom to play videogames when he could.

As the pair’s spines curved more, the risk of fracture increased. In 2011, doctors suggested surgery.

The parents balked at putting them through a procedure that wasn’t vital to survival. Anesthesia is risky for a child on a ventilator, and one with a degenerative muscle disease often doesn’t recover strength lost in surgery.

Megan changed their minds. Mr. Crowley in 2012 returned from a trip to find her room redone in pink-and-black wallpaper. He says he asked if she wanted to live with such garish colors.

“It doesn’t matter,” she replied. “In a couple of years I’m outta here.”

“Where are you going?”

“College, of course.”

It sank in: Megan, who wasn’t supposed to live to elementary-school age, might go to college. Mr. Crowley says he envisioned her bent way over, wheeling to class on a far-off campus.

“They’re alive and they want us to help them decide when enough is enough. Who am I to judge?”

—Priya Kishnani, chief of medical genetics at Duke University Medical Center

“Nothing else makes her look deformed except for her spine,” he told his wife. “Maybe we should start thinking about the surgery.”

When Megan heard there was an operation that might let her sit straight, “it was like Everest,” says Andrew Condouris, her learning aide. “Once she knew it was there, she just had to do it.”

Patrick had the opposite reaction. “No, no, no, I’m good!” his parents say he shouted when asked if he would consider surgery.

In the summer of 2012, Megan’s parents took her to Dr. Roye, a specialist in straightening children’s spines at Columbia University Medical Center. He told Megan he thought he could achieve “about a 50% correction,” he says. “Think of the operation as giving you an internal brace to keep you from collapsing into your chair.”

Then, the warning: “There is a small chance you won’t survive the procedure.”

Megan didn’t speak as they drove home, turning up Katy Perry on her headphones, she says, to drown out emotions that swung from excitement at the prospect of sitting straight to terror about possibly dying.

In October, Megan wheeled to her dad as Sunday-night football played. “I’ve made my decision,” she told him.

Mr. Crowley says his stomach tightened. The possibility of losing her terrified him.

“I want to have my operation,” Megan told him.


“I don’t like the way I look and I don’t like the way I feel.”

It was the first he’d heard Megan complain about her appearance. That night in the kitchen, Megan laid out a schedule. She wanted her sweet-16 birthday party in December and her surgery the next June. She would recover for junior year.

As Megan’s birthday neared, she reserved the Westin Hotel ballroom and invited 200 guests. “This might also be my wedding,” Megan told her parents—in hopes, she says, that reminding them that marriage might not be in her future would persuade them to spend liberally.

On Dec. 15, 2012, in a bright-pink sequined dress, Megan wheeled into the ballroom to Lady Gaga’s “Born this Way.” She called guests forward as candles were lighted: friends, cousins, nurses, researchers who had treated her.

She called up her dad’s colleagues from Amicus Therapeutics, the firm he heads that develops Pompe drugs. “Thank you for all that you have done for so many and for the work you continue to do to make a better medicine for me and Patrick.”

Patrick gave a short speech, saying, “I love you, Megan.” When dancing started, he grew agitated, then tearful, as he did in loud places, his parents say. A nurse sped him home to his bedroom.

In the next months, as attention turned toward planning Megan’s surgery, her parents say they asked Patrick whether he wanted the procedure, looking to make him feel included.

The repartee became a family joke. A parent would say, “Patrick, do you want…,” and they would laugh as he shouted, “no!” before the parent could finish.

On June 18, Megan’s parents checked her into the hospital with three pink suitcases. In the first of two planned surgeries, Dr. Roye drove screws into several vertebrae and cut into some of the most deformed to reshape them. He drove six screws into her forehead to attach a carbon halo to later apply traction to stretch her back.

In her room after the eight-hour surgery, Megan was unrecognizable. Her face was swollen, and her arms and legs bruised from intravenous tubes. Her parents stayed up, administering painkillers.

Later, doctors attached 10-pound sandbags on pulleys to her halo to stretch her spine. She lay faceup in traction, stitches running down her back underneath her, for two agonizing weeks, her parents taking turns holding up an iPad showing movies.

During the second surgery, Dr. Roye anesthetized her and cut her back open again, attaching metal rods to her spine. He was pulling her spine straight when the nervous impulses stopped.

The warning alarm evoked a recurring nightmare for Dr. Roye, a dream in which he takes a child’s spine apart and can’t get it together again.

He ran through a checklist he wrote for crises. Temperature? Normal. Blood pressure? Normal. Screws? None had moved into her spinal canal.

But when he woke her, nerve signals didn’t appear. He had to undo whatever damage he’d done.

He began taking out the rods. With the last out, her impulses had returned.

When Megan woke again, she knew something was wrong. Her halo was still on. With a tube in her throat, she looked at her dad and then up at the halo, demanding an explanation with her eyes.

“Megan, you did great,” he told her. “Everything went well.”

The next evening, Mr. Crowley says he finally told her the surgery hadn’t gone well. If her spine wasn’t permanently damaged, she would need a third surgery.

“You lied to me, daddy,” she repeated, crying. “You told me all my life you’d never lie to me.”

Scans showed no damage, and Dr. Roye decided to try again. “No matter what, safety must be No. 1,” Mr. Crowley says he told Dr. Roye. “If we could just have her back the way she was, we’d be happy.”

On July 12, Megan was wheeled into the operating room. At 4 p.m., Dr. Roye reported the surgery was successful, straitening her spine enough so she could appear to be sitting up.

For Patrick, though, seeing Megan in the hospital “sealed the deal” against surgery, Mr. Crowley says. He was horrified to see her in traction, wounds oozing where screws held the halo. Patrick didn’t ask to visit again.

“He doesn’t like the way he looks,” Mr. Crowley says. “But knowing what Megan went through, there’s no way he would ever consider that surgery now.”

When Megan returned home after 32 days, she set a goal: By Sept. 7, she would recover enough to go wedding-dress shopping with her engaged cousin.

That day, in a black-leather skirt and high heels—sitting up straight—Megan wheeled into a Manhattan bridal store. Gowns and mirrors were everywhere. For the first time since surgery, Megan says, she forgot she was in pain.

School started two days later. During English, Megan’s back pain grew unbearable. She left the room to cry in the hallway. “Honey, let’s just go home,” her nurse said.

“No,” Megan replied, wheeling to the classroom.

“She’s like a typical teenager in many ways,” says Mr. Condouris, her aide. “But you also see an individual who is pushing herself out there—ambitious, driven, with a real sense of who she is and what she wants to do.”

Megan and Patrick probably face lifelong complications and will need constant nursing care unless new treatments can reverse the disease. Pompe experts say they don’t yet know what life expectancy is for patients on the new drug.

Mrs. Crowley says she finds it unbearably sad knowing how frustrated Patrick is by his inability to move. But she says they take comfort that he isn’t in pain most of the time and enjoys many daily activities.

Megan has lost most leg movement. Her bones are brittle. She can move her arms enough to type on her iPhone and operate her wheelchair but is likely to lose more strength unless new treatments are found.

Still, her father says, “she thinks there’s more therapies coming for her down the road, so there’s hope.”

In the fall, he took her to buy SAT-prep books. He asked: “Are you ready yet to go to Notre Dame?” his alma mater. Megan responded that socializing was her priority.

“Notre Dame doesn’t have sororities,” her mom told her later. Megan replied: “So maybe I’ll just have to go out there and start some.”

She asked Mrs. Crowley to look at her new school photos. In years past, she approached picture day with resignation, slumped so far that her shoulder was almost at head’s level.

This time, Megan says, she rolled to the photographer excitedly.

Mrs. Crowley looked at the photos. Megan still couldn’t smile, but otherwise looked like other kids, holding up her head. “They’re really nice,” she said.

“Order some more,” Megan said. “They’re awesome.”



























第1讲 认识自我




第1课 成长,是往内在去探索自己,而不是向外去需索感官的满足第2课 努力朝向最适合自己的路去发展,但也需要天时、地利、人和的因缘具足

第3课 从探索兴趣开始发展自我,找出最适合自己的方向

第4课 接受天生的限制,改进自己的缺点,也是一种自信

第5课 大鸭、小鸭,各有各的发展,经过努力与磨练,小鸭也有变成大鸭的可能

第6课 以发展自我为目的,就能把“吃苦”当作“进补”

第7课 立定志向之后,就要坚定信念,绝不退转

第8课 志向愈大,挫折和诱惑就相对地变小

第9课 承担责任,完成使命,并非好大喜功,而是要分享梦想

第10课 找到生命的导师,效法成功的典范

第11课 善用危机感激发自我的力量,突破环境的障碍

第12课 利他的练习,可以从无我开始

第2讲 爱与亲密关系



爱, 必须是对等的付出吗?

第13课 慈悲,是爱的最高层次,足以跨越人心的藩篱,及于一切众生

第14课 真正的慈悲,是不分对象、没有条件的

第15课 亲密关系之中若含有控制的成分,就可能伤害彼此的爱

第16课 即使是亲情,也必须进化;父母学会放手,亲子之间的爱才能长久

第17课 教养子女之前,父母应该先教养自己

第18课 要解决欠缺安全感的问题,不是仰赖更多的亲密关系;而是建立信任

第19课 婚姻中的伴侣关系,不是嫁鸡随鸡,而是要照顾对方一辈子,彼此守护

第20课 爱不一定要有相对的回馈;真正的爱是无条件的、平等的付出

第21课 要尽力和自己建立最亲密的关系,有自信就不会恐惧不安

第22课 学会慈悲,松开心中的防线,拆除心中的城墙,才能得到真正的解脱

第23课 唯有慈悲,才能解决因为爱而引起的冲突

第24课 “放下”心中的包袱;但永远不“放弃”心中的理想和责任

第25课 善用“爱的减法”,让亲密关系更欢喜自在

第26课 真正的“看破”,并非彻底失望;而是体认世事都是虚幻的,不再执着

第27课 勇于承担别人惠予的付出,将来才有分享出去的能力

第3讲 孤独




第28课 善用孤独的力量,是成就自我很重要的修行

第29课 必须妥善处理内心的孤独,才能转化成为正面的力量

第30课 像潜水般跃入最深沉的孤独里,才能浮现出最真实的自我

第31课 有心、有愿,就会有定力,不会被外在环境干扰

第32课 与世隔绝,让自己孤独,对修行来说是必要的

第33课 随着因缘的路途前行,自己就是最好的知音

第34课 遭遇人际关系的挫折,要检讨自己;但不要否定自己

第35课 倘若自己的想法很先进、很独到,就必须多沟通,让别人充分了解

第36课 权势的孤独,并非因为位居高处,而是不当行使权力

第37课 用行动的热情,融化内心的孤独

第38课 共修,既可以鼓励自己,也可以约束自己

第39课 用慈悲的心,相互包容,双方才能得到共修的好处

第40课 每个人的生命价值判断不同,应该彼此尊重

第41课 化“被动的孤独”为“主动的孤独”,就不会感觉孤独了第42课 帮助孩子化解孤独的感受,是父母应尽的责任

第43课 修行自己,并非只是独善其身,而是以苍生为念,利益众生

第4讲 欲望与恐惧




第44课 智者畏苦,但能够深刻体认别人的苦,却是慈悲心的开始

第45课 “害怕”与“讨厌”是一线之隔;去除“傲慢”,才能面对恐惧,展现自信

第46课 傻人有傻福,聪明的人也有聪明的好处,只要自己尽了自己的力量,就不必恐惧

第47课 满足私利的欲望,叫做“私欲”;成就公众的利益,叫做“愿心”

第48课 只要是为公共利益,不为私人,就不会患得患失

第49课 愿心,是来生来世、永生永世,都要继续再做下去的坚持

第50课 转念的时机,跟年龄没有绝对关系;而是要视个别的人生际遇或智慧开发而定

第51课 愈早转念愈幸福,因为转念之前,追求私欲的路程很辛苦

第52课 发愿心,要有自知之明,量力而为,才不会力不从心

第53课 只有“舍”,没有“得”的欲望,才能够连“烦恼”都舍下

第54课 “想要”,如果超过“需要”;“消费”,就会变成“浪费”

第55课 人之所以高贵,是气质、是品格,而不是珠光宝气的价值

第56课 性冲动,可以用心理来克服,也可以用生活来调剂

第57课 为公众利益而修行,以“愿”心而得“愿”力;但是,发了愿心,还需要正确的方法

第58课 用宽大与坚强,消除竞争的恐惧,唤醒更大的愿心

第59课 拿自己的专长,去服务别人,就会产生“利他”的思考

第5讲 自由;自在




第60课 为了积极实践目标而分分秒秒把自己捆绑,是愚痴的事

第61课 要学会放轻松,不要做超过自己能力范围的工作

第62课 自由和放荡不同。前者,有目标;后者,没有目标

第63课 自由,并非不受规范;此刻若不受规范,将来可能更不自由

第64课 适时向别人说“不”,才能保住“自由”;不要为了迎合别人的期待而扭曲自己

第65课 自由的真谛是:所做的一切,都是出于本身自愿的选择

第66课 因为有自知之明,面对诱惑时,才能解脱

第67课 要先能够放下自我中心,才能得到更多自由

第68课 觉悟,来自前世累积的善根,也要靠后天努力修行

第69课 即使,修行没有开悟,还是可以对别人有所帮助

第70课 修行的目的,就是为了得到解脱

第71课 自由,是不受束缚;自在,则是自己做主,没有阻碍

第72课 利益众生积极的作为,不会因为行动受限而无法发挥

第73课 在家修行,不应该忽略对家庭应尽的本分

第74课 修行要持之以恒,最好的方式就是回到初发心

第75课 遵守戒律,出于自己的选择,就不会觉得苦,反而是一种快乐的解脱

第76课 世界和平,就是追求全体的自由自在

第6讲 挫折与勇气



“坚强”、“逞强”、“顽强”有什么差异?第77课 多读书,多向专家请益,可以促使因缘成熟

第78课 落实“四它”:面对它、接受它、处理它、放下它,要从勇气开始

第79课 不要用因果论,去解释过去已经发生的事

第80课 坚持,是用理性去评估,而不是用意气或情绪

第81课 最大的勇气是放下自我,因此而得到开悟

第82课 不论碰到多大的困境,都要有耐性,相信时间都可以将它改变

第83课 忏悔是非常重要的修行方法,也是修行必备的条件

第84课 如果不知道要对谁忏悔,就对佛忏悔

第85课 忏悔最主要的作用,在于自我反省,因为改过而得到成长

第86课 忏悔以后,除了悔过之外,还要弥补对别人造成的伤害

第87课 犯错的人,需要忏悔;受伤的人,需要宽恕

第88课 宽恕,也是一种勇气的表现

第89课 受害者是菩萨,用肉身的痛苦教育社会大众

第90课 学会宽恕,才能真正打开心结

第91课 勇气,并非外在的剽悍或刚强,而是内在的强韧与坚毅

第92课 真正的勇气,并非蛮力;而是精进不懈的力量

第7讲 生命的归宿




第93课 不追问过去,不妄想未来,只需把握当下

第94课 信仰,并非靠外在印证;而是内心的感应

第95课 神秘经验,跟个人的修行及缘分有关

第96课 极乐,是从烦恼中得解脱。每个解脱的人,都有机会成佛

第97课 相信往生的亲人,会继续他下一段的旅程,是安顿自己对生死牵挂最好的方式

第98课 超渡亡魂,是为了在往生路上助他一臂之力

第99课 消极还债;积极还愿。自己得解脱,奉献给别人

第100课 若想不到对方的“恩”,就用“愿”来替代。“愿”的力量,比“恩”更大

第101课 有宗教信仰的人,内心比较安定、知足

第102课 宗教的入门,是身体力行的实践,在努力实践的过程中,就能体会修行的好处

第103课 当亲友往生时,学习洞见生死的微妙,对自己而言,也是一个重生的开始

第104课 有宗教信仰,对生命的归宿才会有落实感。生离死别,虽然痛苦,却可以渐渐解脱

第105课 从积极面对死亡的态度中,可以重新审视自己生命的意义与价值

第106课 体认生命很脆弱,才能学会珍惜及尊重

第107课 真正的吃苦是勇于接受挑战,获得成长,而不是自寻烦恼

第108课 菩萨不怕苦,一次一次地重返人间,向众生学习



出版七十几本畅销作品的吴若权,数月来每周两次亲自访谈圣严法师,并以第一人称纪录对谈内容精华,汇整成为充满智慧与法喜的修行笔记。 一位常以文字滋润读者,一位总以佛法抚慰众生,两位艺术家在此交会,互相倾听。当作家透露自己因为父丧而倾向忧郁时,法师也道出自己的父亲是自杀离世。作家提出人生中避不开的迷惘与未知,法师则以一种法喜充满的慈悲心来轻轻解惑。书中并以两人各自的生命故事来串联,读来亲切,亦具深度。


































































































































Debunking the Myth of the 10,000-Hours Rule: What It Actually Takes to Reach Genius-Level Excellence; Ideally that feedback comes from someone with an expert eye. If you practice without such feedback, you don’t get to the top ranks

Debunking the Myth of the 10,000-Hours Rule: What It Actually Takes to Reach Genius-Level Excellence


The question of what it takes to excel – to reach genius-level acumen at a chosen endeavor – has occupied psychologists for decades and philosophers for centuries. Groundbreaking research has pointed to “grit” as a better predictor of success than IQ, while psychologists have admonished against the dangers of slipping into autopilot in the quest for skill improvement. In recent years, one of the most persistent pop-psychology claims has been the myth of the “10,000-hour rule” – the idea that this is the amount of time one must invest in practice in order to reach meaningful success in any field. But in Focus: The Hidden Driver of Excellence (public library), celebrated psychologist and journalist Daniel Goleman, best-known for his influential 1995 book Emotional Intelligence, debunks the 10,000-hour mythology to reveal the more complex truth beneath the popular rule of thumb:

The “10,000-hour rule” – that this level of practice holds the secret to great success in any field – has become sacrosanct gospel, echoed on websites and recited as litany in high-performance workshops. The problem: it’s only half true. If you are a duffer at golf, say, and make the same mistakes every time you try a certain swing or putt, 10,000 hours of practicing that error will not improve your game. You’ll still be a duffer, albeit an older one.

No less an expert than Anders Ericsson, the Florida State University psychologist whose research on expertise spawned the 10,000-hour rule of thumb, told me, “You don’t get benefits from mechanical repetition, but by adjusting your execution over and over to get closer to your goal.”

“You have to tweak the system by pushing,” he adds, “allowing for more errors at first as you increase your limits.”

The secret to continued improvement, it turns out, isn’t the amount of time invested but the quality of that time. It sounds simple and obvious enough, and yet so much of both our formal education and the informal ways in which we go about pursuing success in skill-based fields is built around the premise of sheer time investment. Instead, the factor Ericsson and other psychologists have identified as the main predictor of success is deliberate practice – persistent training to which you give your full concentration rather than just your time, often guided by a skilled expert, coach, or mentor. It’s a qualitative difference in how you pay attention, not a quantitative measure of clocking in the hours. Goleman writes:

Hours and hours of practice are necessary for great performance, but not sufficient. How experts in any domain pay attention while practicing makes a crucial difference. For instance, in his much-cited study of violinists – the one that showed the top tier had practiced more than 10,000 hours – Ericsson found the experts did so with full concentration on improving a particular aspect of their performance that a master teacher identified.

Goleman identifies a second necessary element: a feedback loop that allows you to spot errors as they occur and correct them, much like ballet dancers use mirrors during practice. He writes:

Ideally that feedback comes from someone with an expert eye and so every world-class sports champion has a coach. If you practice without such feedback, you don’t get to the top ranks.

The feedback matters and the concentration does, too – not just the hours.

Additionally, the optimal kind of attention requires top-down focus. While daydreaming may have its creative benefits, in the context of deliberate practice it only dilutes the efficiency of the process. Goleman writes:

Daydreaming defeats practice; those of us who browse TV while working out will never reach the top ranks. Paying full attention seems to boost the mind’s processing speed, strengthen synaptic connections, and expand or create neural networks for what we are practicing.

At least at first. But as you master how to execute the new routine, repeated practice transfers control of that skill from the top-down system for intentional focus to bottom-up circuits that eventually make its execution effortless. At that point you don’t need to think about it – you can do the routine well enough on automatic.

But this is where the amateurs and the experts diverge – too much automation, and you hit the “OK plateau,” ceasing to grow and stalling at proficiency level. If you’re going for genius, you need to continually shift away from autopilot and back into active, corrective attention:

Amateurs are content at some point to let their efforts become bottom-up operations. After about fifty hours of training – whether in skiing or driving – people get to that “good-enough” performance level, where they can go through the motions more or less effortlessly. They no longer feel the need for concentrated practice, but are content to coast on what they’ve learned. No matter how much more they practice in this bottom-up mode, their improvement will be negligible.

The experts, in contrast, keep paying attention top-down, intentionally counteracting the brain’s urge to automatize routines. They concentrate actively on those moves they have yet to perfect, on correcting what’s not working in their game, and on refining their mental models of how to play the game, or focusing on the particulars of feedback from a seasoned coach. Those at the top never stop learning: if at any point they start coasting and stop such smart practice, too much of their game becomes bottom-up and their skills plateau.

But even with the question of quality resolved, there’s still that of quantity: Just how much “deliberate practice” is enough? Focused attention, like willpower, is like a muscle and gets fatigued with exertion:

Ericsson finds world-class champions – whether weight-lifters, pianists, or a dog-sled team – tend to limit arduous practice to about four hours a day. Rest and restoring physical and mental energy get built into the training regimen. They seek to push themselves and their bodies to the max, but not so much that their focus gets diminished in the practice session. Optimal practice maintains optimal concentration.

In the rest of Focus, Goleman goes on to explore how concepts like attention-chunking, emotional empathy, and system blindness influence the pursuit of excellence. Complement it with how grit predicts achievement and the science of the “winner effect.”

Did it snow on the summit of Mount Kinabalu?

Did it snow on the summit of Mount Kinabalu?


Saturday, January 25, 2014 – 09:59

The Star/Asia News Network

KOTA KINABALU – Did it snow at Mount Kinabalu just before dawn on Jan 17 when temperatures dipped to -3 deg C?

A report submitted to Sabah Parks by their head ranger Martin Mogurin indicated that there were signs of snow at the summit area of the 4,101m-high mountain along the Crocker Range around 4am.

Martin said guides at the mountain submitted a report but were unable to back it up with pictures as it was dark. Sabah Parks officials are trying to verify the report.

Sabah Parks chairman Tengku Zainal Adlin, who has climbed every face of Mount Kinabalu in the last five decades, is not surprised over the snow report.

Zainal said that ice on the mountain was common, especially in the early hours of the morning.

Sabah Parks director Paul Basintal said he was gathering information but he has his doubts about the snow.

Sabah meteorologists, however, are firm in dismissing any possibility of snow on Mount Kinabalu as it was too close to the Equator.

“Ice occurrence, yes, but snow? Not possible,” said Sabah Meteo­rological Department director Abdul Malik Tussin.

He said Sabah has been experiencing cold weather due to the annual Siberian winds coupled with high amount of rain due to the usually wet northeast monsoon season and a low atmospheric pressure over Sabah.

When Mao praised the beauty of Japan; while reformers and revolutionaries alike resented Japan’s defeat of their country, they could respect Japan’s economic and social achievements. Chen Duxiu and Li Dazhao both studied in Japan

When Mao praised the beauty of Japan

Sunday, January 26, 2014 – 09:00

John Gee For The Straits Times

The Straits Times


A HUNDRED years ago, Japan was, to many Chinese intellectuals, a source of inspiration, a place of educational opportunities and a political refuge.

In the current climate of Sino-Japanese relations, that is easy to forget.

Japan’s victory in the Sino-Japanese war of 1894-5 emphasised to many Chinese how their country’s failure to modernise had weakened its ability to defend itself. China had been defeated and bullied by Western powers since the Opium Wars, but this was the first case in modern times that it had suffered defeat at the hands of another Asian country, long assumed to be no match for China.

The lesson drawn by many was that China needed to learn from how Japan had built itself into a powerful country. Within the Qing Court, there were modernisers who saw a need for administrative reform and a re-equipped, re-trained armed forces.

And they continued to hold this view even after the imperial army, then in the process of modernisation, was defeated by better trained foreign troops during the Boxer Rebellion of 1899-1901.

Elsewhere, there were those, such as Sun Yat Sen, who concluded that the Qing dynasty and the imperial institutions that upheld its rule were a fundamental obstacle to China’s modernisation. But while reformers and revolutionaries alike resented Japan’s defeat of their country, they could respect Japan’s economic and social achievements.

Attitudes towards Japan became much less ambivalent as a result of the Russo-Japanese War of 1904-05. It was largely fought on Chinese territory, in Manchuria, and Chinese civilians were inevitably killed and maimed during the conflict. Chinese property was one of the prizes at stake in the war: Japan aimed to wrest Port Arthur (Dalian) from Russia, as well as assert its interests in the resources of Manchuria.

Yet what mattered to most patriotic Chinese at the time was that an Asian country had defeated a European power. They could therefore overlook China’s own losses in the war, as well as the defeat of 1895.

Japan admitted a stream of Chinese students to its universities at this time. One of them was Lu Xun, later to become well-known as a writer. In 1902, he was given a government scholarship to study in Japan. He learnt Japanese, and much of his early acquaintance with European literature was made through books translated into Japanese.

He returned to China after eight years in Japan.

Years later, in 1926, he recalled with affection Mr Fujino, who taught anatomy in the medical college at Sendai. Lu Xun was the only Chinese student at the college. Mr Fujino asked to see Lu Xun’s notes of his lectures, and then patiently corrected them, which helped ensure that he passed the annual examination.

Lu Xun described him as, of all his teachers, “the one to whom I feel most grateful and who gave me the most encouragement”. He thought that Mr Fujino wanted China to have modern medical knowledge.

Chen Duxiu and Li Dazhao, founders of the Communist Party of China, both studied in Japan. Chen was there from 1900 to 1902, at Tokyo Normal School and then at Waseda University. This was where he first became involved in politics, joining the Chinese Youth Society, a group founded by one of Sun Yat Sen’s associates.

Chen returned to Japan briefly in 1906 and then again from 1913 to 1915, following the dissolution of China’s first Parliament by the ambitious former Qing general, Yuan Shih-kai.

Li studied political economy at Waseda University from 1913 to 1916 before returning to China.

Zhou Enlai also studied in Japan, though only for 18 months. He arrived in 1917 and went to classes at Waseda University, in Tokyo, and at Kyoto University. In 1936, he told American journalist Edgar Snow that he had met other “revolution-minded” Chinese students while there.

Another Chinese who studied in Japan taught Mao Zedong. Interviewed by Edgar Snow in his book, Red Star Over China, Mao recalled going to a new school when he was 16 years old. One of the teachers there was derided as the “False Foreign Devil” by students, who could see that his queue was false. He had studied in Japan, and Mao liked to hear him talk about what the country was like.

The teacher taught English and music. One of his songs was called The Battle Of The Yellow Sea. It celebrated Japan’s victory over Russia in 1905, and made such an impression on Mao that he could still remember part of it in 1936, when he spoke to Snow.

Mao said: “At that time I knew and felt the beauty of Japan, and felt something of her pride and might, in this song of her victory over Russia. I did not think there was also a barbarous Japan – the Japan we know today”.

Among the Chinese who went to Japan in the early 20th century were political dissidents who did not arrive, first of all, as students. The best known was Sun Yat Sen, who lived there for much of the period between the First Guangzhou Uprising in 1895 and the 1911 Revolution.

It was in Tokyo that the Tongmenghui (United League), forerunner of the Kuomintang, was formed, though it soon relocated its headquarters to Singapore.

If Chinese reformers and revolutionaries had a positive impression of Japan in the early years of the 20th century, it changed fairly quickly during World War I.

Japan’s leaders agreed that their country needed guaranteed access to Chinese resources.

But they disagreed over the best way to secure it – whether through cooperation with a Chinese government, albeit on terms favourable to Japan, or through more direct control. The issue was settled by World War I, when the European powers that had previously checked Japan’s ambitions in China were thoroughly preoccupied with fighting each other.

As an ally of Britain, Japan occupied the German base of Tsingtao (Qingdao) in 1914 and sought to retain it, as well as German economic interests in Shandong province.

In December 1914, Japan’s ambassador to China presented Yuan Shih-kai’s government with the Twenty-One Demands, which called for extensive economic concessions to Japan, including rights over a number of railways.

The government felt forced to agree to most of the demands, but the episode reflected badly on both Japan and Yuan Shih-kai in the eyes of patriotic Chinese. When Japan tried to solidify its gains in China at the Versailles Peace Conference in 1919, it provoked the May Fourth Movement. Sino-Japanese relations went from bad to worse, reaching their nadir with the war of 1937-45.

Today, it is all too easy for nationalists in China and Japan to incite hostility between their peoples and portray their modern histories in terms of unending conflict. That interpretation, however, is simply untrue.

The two nations grated against each other, and fought, as neighbours often do.

But there were also episodes when state-to-state relations were better, and, even more, when there were ties of friendship, respect and cooperation between citizens of the two countries.

The writer is a freelance journalist who writes regularly on Asian affairs.

Indonesia must hold joint polls from 2019; Indonesia’s constitutional court ruled that holding separate polls for Parliament and president – as has been done in the past two elections – was against the spirit of the Constitution

Indonesia must hold joint polls from 2019

Sunday, January 26, 2014 – 09:00

Zakir Hussain

The Straits Times

INDONESIA’S constitutional court yesterday ruled that holding separate polls for Parliament and president – as has been done in the past two elections – was against the spirit of the Constitution.

But it said this year’s elections will carry on as scheduled to avoid disrupting a process that is already under way.

Simultaneous elections will start from 2019, the eight-man court ruled, in striking out sections of the presidential election law.

However, the court, led by Judge Hamdan Zoelva, stressed that this year’s elections will remain valid and constitutional.

The landmark decision reduces uncertainty over a possible delay to the April9 elections for Parliament, and drew support across the political spectrum as a middle way out that would prevent instability as some 190 million eligible voters head to the ballot box.

National Awakening Party (PKB) deputy secretary-general Abdul Malik Haramain told reporters: “I appreciate the ruling that weighed up the social and political aspects (to the matter), not just the judicial aspect.”

Changing the process this year, the court said, “could disrupt the conduct of the 2014 election and surface legal uncertainty, which is not desirable”.

The presidential election is scheduled for July, and set to be fiercely contested as President Susilo Bambang Yudhoyono is not allowed to stand for a third term.

National elections are held every five years.

Before 2004, there was one election for Parliament, and the president was then elected by Parliament.

The current arrangement, which saw voters elect MPs and a president three months apart in 2004 and 2009, came about as part of democratic reforms after the rule of strongman Suharto ended in 1998.

In its 92-page ruling, the court said the current practice fails to produce checks and balances that work, and does not strengthen the presidential system.

The court noted that presidential and vice-presidential candidates have to form tactical coalitions with political parties, which result in constant bargaining.

Having joint elections, it argued, would be more efficient, save costs and allow voters to vote more wisely.

But yesterday’s ruling drew criticism that it was politically motivated to safeguard the interests of major political parties.

“Why was it not read out much earlier? Why only now?” political communications academic Effendi Gazali, who filed the challenge to the presidential election law early last year, told reporters at the court.

Former constitutional court chief Mahfud MD said much of the deliberation on the case had been decided early last year.

Earlier this week, election commissioner Hadar Gumay also said whichever way the court ruled, the commission would have to work to ensure smooth elections.

The verdict comes two days after former law minister and state secretary Yusril Ihza Mahendra, who heads the Crescent Star Party (PBB), filed a separate challenge to the law.

Professor Yusril sought a decision on simultaneous elections, and also challenged the validity of the requirement for a presidential threshold which requires parties to have 25 per cent of the popular vote or 20 per cent of seats in Parliament before they can field a presidential candidate.

The court ruling yesterday did not address the issue of this requirement which, if struck out, could see a more crowded field of presidential contenders in July.

But Judge Maria Farida Indrati, in a dissenting opinion, said this criterion could still apply with simultaneous elections, but should be left to lawmakers to decide.


Hatred is not the only big worry in Thailand

Hatred is not the only big worry in Thailand

Saturday, January 25, 2014 – 15:23

The Nation/Asia News Network

THAILAND – The political crisis has become extremely dangerous not only because the hatred is feeding off itself, but also because law-enforcement officers are seen as biased in favour of the government.

Whether the police are intentionally partisan or are being pushed into a corner is debatable, but that doesn’t matter much now. The country is in serious trouble because, increasingly, anti-government protesters and the police are failing to see eye to eye.

In 2010 the police were accused of dragging their feet as the Democrat government struggled to contain the red shirts’ revolt. This time the police have been accused of being tools of the Pheu Thai government. The demonstrators have besieged key police headquarters several times, and outbreaks of violence have seen police firing tear gas and protesters hurling stones.

The situation is increasingly worrisome. The rift between a large section of society and the police is threatening to widen.

A demonstration by police recently confirmed their frustration, but they cannot blame it all on the anti-government protesters. Bangkok Police Chief Kamronwit Thoopkrajang showed off Thaksin Shinawatra’s photo in his office. His admiration of Thaksin is well publicised, not least because he wants it to be.

The anti-government campaign has targeted the police as the main pillar of the “Thaksin system”. Protest leader Suthep Thaugsuban has repeatedly said that, when he achieves victory, among the first items on the agenda would be a thorough reform of the police force. Suthep’s threat no doubt strikes fear into the police. All of a sudden, the force’s political stake in the crisis is firmly attached to who wins and who loses this showdown.

In fact, the stakes are getting higher and higher on both sides. The contrast with previous political crises is stark. This time, many more people have everything to gain from victory – and everything to lose from defeat. However, it is wrong for those who enforce the law to have any stake at all. Their duty demands that they remain completely neutral.

35-tonne truck rams into Taiwan President Ma Ying-jeou’s office

35-tonne truck rams into Taiwan President Ma Ying-jeou’s office


Saturday, January 25, 2014 – 11:46


TAIPEI – Taiwan stepped up security measures Saturday after a driver rammed a huge truck through a bullet-proof screen and into the main gate of the presidential office, apparently intentionally, officials said.

A man identified only by his family name Chang drove the 35-ton truck through railings, the screen, and up a set of steps before coming stuck in the gate leading to the office’s main building, police said.

President Ma Ying-jeou was not in at the time as he is on a state visit to Sao Tome and Principe in Africa. He has been notified of the incident, his spokeswoman said.

She added that security measures had been beefed up at the Taipei site following the early morning incident and that police were investigating a cause and motive. She did not specify what the increased security measures were.

The impact from the crash knocked the driver unconscious and he was taken to a nearby hospital for treatment, police said. No one else was injured and the truck was towed from the scene.

“Chang has a criminal record and so far he has refused to answer any questions,” police spokesman Fang Yang-ning said, adding that they suspect he crashed “intentionally”.

Lessons from the past – when fear drove nations to war

Lessons from the past – when fear drove nations to war

Sunday, January 26, 2014 – 08:50

Andreas Herberg-rothe For The Straits Times

The Straits Times

WITH the 100th anniversary of World War I this year in mind, the overarching task of policy in a globalised, multipolar world is to manage the rise of the Global South by avoiding great wars and the cancer of mass violence.

During her last visit to Beijing in September 2012, former US secretary of state Hillary Clinton held a press conference in which she stated that the world would soon see, for the first time in history, that a rising power and an established power would not engage in a war. Of course her statement was related to China and the US.

Although I don’t think war between these nations is inevitable, I do think Mrs Clinton described the problem well.

No one wanted World War I to happen. Or, at least, no one wanted the kind of war that actually took place. The general assumption was that the conflict would be very limited. The Europeans who went to war assumed they would be home by Christmas 1914. We know now, of course, that World War I not only happened, but that it also resulted in the self-destruction of the European powers in two world wars.

For a long time Germany was blamed for the outbreak of World War I. The assumption was that the war was the result of the German desire to become a world power.

Without rejecting this approach completely, I think that the more disturbing interpretation has been given by Australian historian Christopher Clark in his characterisation of the European powers and their politicians before and during the war as “sleepwalkers”.

According to him, no one had any idea of the degree to which the violence would escalate.

World War II was different in that it was more deliberate – the result of the activities of Nazis in Germany. The outbreak of World War I, on the other hand, was the outcome of a traditional power struggle.

It included the rise of new great powers, an arms race, a pre-emptive strike by the Germans, perhaps even out of fear, and a policy of sleepwalking by the leading figures in Europe.

Above all, it showed how a failure to understand the seriousness of the chaotic, near-genocidal fighting in the Balkans would drag Europe into catastrophe.

Some theoreticians have implied that we are witnessing a return to the Middle Ages with respect to international security. But in fact we are returning to a development that is structurally much more comparable to the pre-World War I period, especially in Asia.

Mrs Clinton has already compared the competition between China and the US with that of the Peloponnesian War between Sparta and Athens – authoritarian Sparta against democratic Athens. Athens, the strongest city- state in Greece before the war, was reduced to a state of near- complete subjection, while Sparta became established as the leading power.

World War II is not a good comparison because there is no totalitarian ideology in sight which could be compared with that of the Nazis. The Cold War does not provide an illuminating model for comparison either. There are not just two superpowers.

In Asia we have several actors to take into account apart from the US and China. These include India, Russia and Japan.

Following Mr Clark, it could be said, that at the heart of the causes of World War I was a lack of understanding about the real situation. European leaders failed to understand the turmoil in the Balkans, or comprehend the implications of the conflict between established and rising powers. They also failed to comprehend the capabilities of the military forces that would be unleashed.

Thucydides, the chronicler of the Peloponnesian War and one of the ancient world’s most important historians, sees the initial cause of this war in the growth of Athenian power: “What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta.”

Unlike Plato, though, Thucydides argues that it was not the striving for power in itself, but rather fear of loss of power and, in the long term, fear of being oppressed, robbed of one’s freedom, and enslaved that caused the escalation leading to war.

In Thucydides’ account, fear was the cause of war on both sides. Sparta was afraid of the growth of Athenian power, and Athens was afraid of what might happen if it gave in to an escalating series of demands and threats, the end result of which could not be foreseen.

There are many structural similarities here between the pre-1914 period in Europe as well as the current conflicts in Asia. I don’t think that history is repeating itself entirely. But the resemblance is striking.

The writer is a lecturer at the faculty of social and cultural studies at the Fulda University of Applied Sciences, Germany.


Celebrating Seollal, the Lunar New Year, in old Korean fashion

Celebrating Seollal in old Korean fashion

Saturday, January 25, 2014 – 13:41

Julie Jackson

The Korea Herald/Asia News Network

SEOUL – Seollal, the Lunar New Year, is one of the most celebrated holidays in Korea: It is not only a time to pay respects to one’s elders and ancestors, but is also an opportunity to spend time with family and friends to celebrate the New Year immersed in tradition. With the colorful hanbok (traditional Korean costume) and the traditional food and folk games, Seollal gives people the chance to experience some real Korean culture.

Whether it be traveling to the countryside to reunite with extended family or staying in the city to relish the time off work or school, Seollal can be a great opportunity to immerse oneself in traditional Korean culture; and for those looking to get off the couch and usher in the Year of the Horse by doing something different from the usual weekend dinner and a movie, there is an endless number of events in Seoul and surrounding areas that offer visitors opportunities to celebrate the holiday.

Visitors dressed in a hanbok will receive free admission to the five major historical palaces (Gyeongbokgung, Changdeokgung, Changgyeonggung, Deoksugung and Gyeonghuigung), the royal shrine (Jongmyo) and royal tombs, as well as qualify for discounts at a number of museums throughout Korea.

As it does every year, Gyeongbokgung Palace – Seoul’s largest palace and the main palace of the Joseon Dynasty for more than 500 years – will organise a number of Seollal events during the holiday weekend for locals and foreigners, ranging from cultural performances to folk games. The most common folk games at the palace grounds include jegichagi (Korean hacky sack), tuho (arrow ring toss) and neoltwiggi (seesaw).

The National Folk Museum of Korea is currently holding an exhibition in tribute to the Year of the Horse. The “Horse, a Vigorous Gallop” exhibition features some 60 works of art including literature and various artifacts that depict horses in Korean culture and history. The exhibition will run until Feb. 17.

Aside from the regular programs of winter kite flying and learning to perform Korean traditional dance and music, the Namsangol Hanok Village located in central Seoul will be celebrating the New Year with fun for friends and family alike. During Seollal, international visitors can enjoy a lesson on the proper procedures of “charye” – a Korean New Year’s ceremony honoring the past four generations of ancestors of one’s family – as well as experiencing a presentation of charyesang (table setting for the ancestral worship ceremony). Visitors will also have opportunities to try out fortune writing and rice cake preparation, and to learn to sing Korean folk songs.

Seoul Namsan Traditional Theater, located in the hanok village, will also be offering special New Year hands-on activities, with hanbok costumes available for guests to try on.

The village will also provide traditional Korean kites. Flying a kite on Seollal is symbolic of wishing away bad fortunes and wishing for a prosperous new year. The special Seollal events will run from Jan. 30 to Feb. 2.

For those looking to venture a short distance outside Seoul city limits, the Korean Folk Village in Yongin, Gyeonggi Province, is a perfect place to wander around outdoors: The dirt paths cut through some 300 traditional houses in the large, sprawling village. While walking around, guests can view folk paintings, learn to fly traditional colorful kites and participate in talisman or fortune writing and hang the papers up for good luck.

The events take place every day until Feb. 2 with admission costing 15,000 won for adults and 10,000 won for children. All visitors wearing hanbok will get a 50 per cent discount off admission.

Is the SEC Going Easy on General Electric? KPMG has been GE’s auditor for more than 100 years. GE is a systemically important financial institution, because of its GE Capital finance arm. GE has paid the firm more than $1.3bn since 2000

Is the SEC Going Easy on General Electric?

The Securities and Exchange Commission unveiled a curious settlement today with KPMG LLP over violations of auditor-independence rules. And it looks like the agency went out of its way to protect the Big Four accounting firm and its longtime audit client, General Electric Co.

The settlement papers came in two parts. The first was an administrative order, under which the firm will pay $8.2 million in fines and disgorgement. The SEC said KPMG provided bookkeeping and other prohibited services to three audit clients. The SEC said some KPMG partners also owned stock in one of the clients, which is a no-no.

The SEC didn’t name the clients, which is odd, because the agency has in other auditor-independence cases. One that comes to mind was a 2010 settlement with a former vice chairman at Deloitte & Touche LLP, Thomas Flanagan, who was caught trading shares of Berkshire Hathaway Inc. and other Deloitte audit clients. Another was a 2002 case against KPMG, which was the auditor for AIM Funds at the same time it had invested $25 million in one of the mutual funds that AIM ran.

The second part of today’s settlement offers more intrigue. The SEC issued a separate report about an investigation into KPMG’s practice of lending tax professionals from its own staff to certain audit clients. Once again, the SEC didn’t name any of the companies. But it’s a safe bet that one of them was GE.

Francine McKenna, who writes about accounting and auditing for her website re: The Auditors, broke the story in March 2011 that KPMG was doing this at GE. Some of the KPMG employees working at GE even were given GE e-mail addresses, she reported.

The SEC spent much of its report explaining what sorts of staff-lending arrangements it had uncovered at KPMG and why they are prohibited. Audit firms’ employees aren’t allowed to act as employees of an audit client. “The legal consequence of an auditor lacking independence is that it violates, and causes its audit clients to violate, various provisions of the federal securities laws,” the report said. The commission said it issued the report “in order to address uncertainty regarding the commission’s interpretation” of its rules on the subject.

The report also said “the commission has determined not to pursue an enforcement action with regard to these loaned staff engagements.” However, it didn’t explain why. And given all of the secrecy, I can’t help but wonder.

KPMG has been GE’s auditor for more than 100 years. GE is a systemically important financial institution, because of its GE Capital finance arm. The company paid KPMG almost $100 million in fees for 2012. It has paid the firm more than $1.3 billion since 2000. Former SEC Chairman Mary Schapiro, who left the agency in December 2012, joined GE’s board last year. And you never know what a fresh pair of eyes might find on GE’s books if the SEC ever ordered it to get a new accounting firm.

Could any of those things have been an issue when the SEC decided not to name any audit clients? Or penalize KPMG for lending them its tax staff? Or disqualify KPMG as GE’s outside auditor? An SEC spokesman, John Nester, declined to comment.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)

To contact the writer of this column:

EBay to Alibaba Hurt by Russia New Rules on Express Parcels Delivered From Abroad as Local Rivals Gain

EBay to Alibaba Hurt by Russia Rules as Local Rivals Gain

Russia’s new rules on express parcels delivered from abroad are benefiting local online stores at the expense of global companies such as EBay Inc. (EBAY) and Alibaba Group Holding Ltd., Renaissance Capital said.

Strengthened document checks were introduced this month on imported goods intended for personal use, regardless of their value, Kommersant reported. Express-delivery operators including Deutsche Post AG (DPW)’s DHL unit and FedEx Corp. (FDX) reacted by stopping shipments to private individuals in the country, while others such as United Parcel Service Inc. said deliveries would suffer delays.

“The losers in this situation are global online stores including EBay and Alibaba, which have been increasing shipments to Russia,” David Ferguson, an analyst at Moscow-based investment bank Renaissance Capital, said by phone. “Local Internet stores including and Lamoda may benefit in the short term.”

Cross-border e-commerce shipments in Russia probably doubled last year to almost $3 billion, while the domestic online retail market rose 26 percent to the equivalent of $15 billion, according to researcher Data Insight.

“A lot of those Russians who made online purchases in global online stores aren’t eager to switch to the local ones,” said Boris Ovchinnikov, co-founder of Data Insight. “They would rather make more purchases while traveling abroad.”

Tax Initiative

President Vladimir Putin said last month that e-commerce should be put “in order” with more tax collected from it. Subsequently, Russia’s Finance Ministry proposed to lower the threshold for tax-exempt online purchases to 150 euros ($206) from 1,000 euros. Meanwhile, Russia has introduced the additional paperwork for deliveries for personal use.

The decision by DHL and FedEx to stop shipments to private individuals in Russia won’t affect EBay as the share of parcels shipped through these operators is insignificant, EBay’s press office said by e-mail. Pamela Munoz, a spokeswoman for Alibaba in Hong Kong, declined to comment.

Maria Nazamutdinova, a spokeswoman for Ozon, and Yana Basaranovich, a spokeswoman for Lamoda, declined to comment.

The effect of Russia’s new rules for the delivery companies will be limited because more than 90 percent of international package and document shipping is business-to-business, said Satish Jindel, president of SJ Consulting Group, a logistics advisory company in Sewickley, Pennsylvania.

To contact the reporter on this story: Ilya Khrennikov in Moscow at

Gold Mint Runs Overtime in Race to Meet World Coin Demand; “People who bought coins have lost value, but they are not looking at short-term gains, and hope springs eternal.”

Gold Mint Runs Overtime in Race to Meet World Coin Demand

Austria’s mint is running 24 hours a day to meet orders for gold coins, joining counterparts from the U.S. to the U.K. to Australia in reporting accelerating demand boosted by the bear market in bullion.

Austria’s Muenze Oesterreich AG mint hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand. Purchases of bullion coins at Australia’s Perth Mint rose 20 percent this year through Jan. 20 from a year earlier. Sales by the U.S. Mint are set for the best month since April, when the metal plunged into a bear market.

Global mints are manufacturing as fast as they can after a 28 percent drop in gold prices last year, the biggest slump since 1981, attracted buyers of physical metal. The demand gains helped bullion rally for five straight weeks, the longest streak since September 2012. That won’t be enough to stem the metal’s slump according to Morgan Stanley, while Goldman Sachs Group Inc. predicts bullion will “grind lower” over 2014.

“The long-term physical buyers see these price drops as opportunities to accumulate more assets,” said Michael Haynes, the chief executive officer of American Precious Metals Exchange, an online bullion dealer. “We have witnessed some top selling days in the past few weeks.”

Gold futures in New York climbed 5.2 percent this month to $1,264.50 an ounce, heading for the first gain since August. The Standard & Poor’s GSCI Spot Index of 24 raw materials slid 1.2 percent, while the MSCI All-Country World index of equities dropped 2.9 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, advanced 0.7 percent.

Prices Rebound

Prices rebounded 7.2 percent since reaching a 34-month low in June as physical buying rose. The Shanghai Gold Exchange, China’s largest bullion bourse, delivered 2,197 metric tons to customers in 2013, compared with 1,139 tons in 2012, it said Jan. 15. The Asian country topped India as the world’s top buyer last year as demand probably reached a record, the World Gold Council estimates.

The U.K.’s Royal Mint, which traces its history back more than 1,000 years, ran out of 2014 Sovereign gold coins because of “exceptional demand,” it said in a statement on Jan. 8. Coins weren’t available to customers until six days later when inventories were replenished. Sales by the Perth Mint, which also has workers producing coins in three shifts a day, will probably beat last year’s record, Ron Currie, the marketing director, said Jan. 20.

Goldman, Morgan

Bullion tumbled in 2013 after some investors lost faith in the metal as a store of value, snapping 12 straight years of gains. Holdings through exchange-traded products fell 33 percent in the past 12 months, erasing $69.1 billion from the value of the funds, data compiled by Bloomberg show. Prices also fell as U.S. equities rallied and inflation remained low.

Goldman expects bullion to fall to $1,050 in the next 12 months as the Federal Reserve reduces monetary stimulus, analysts led by Jeffrey Currie, the bank’s head of commodities research, said in a report Jan. 12. Precious metals are Morgan Stanley’s “least preferred” commodities, and physical demand won’t be enough to buoy prices, analysts Adam Longson, Bennett Meier and Peter Richardson said in a Jan. 17 report. The bank cut its 2014 target 12 percent to $1,160 on Jan. 22.

“Prices are likely to drop further as global economic conditions are stabilizing and tapering worries continue,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “There is no doubt that physical demand has improved, but it will not be enough to support prices.”

Coin Sales

The U.S. Mint, the world’s largest, sold 89,500 ounces so far this month. The Austrian mint that makes Philharmonic coins, saw sales jump 36 percent last year and expects “good business” for the next couple of months, Andrea Lang, the marketing and sales director of Austria’s Muenze Oesterreich AG, said in an e-mail.

“The market is very busy,” Lang said. “We can’t meet the demand, even if we work overtime.”

The price for the Austrian mint’s 1-ounce Philharmonic gold coin slumped 27 percent last year, according to data from the Certified Coin Exchange.

“It’s been a very bad year for gold,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “People who bought coins have lost value, but they are not looking at short-term gains, and hope springs eternal.”

To contact the reporter on this story: Debarati Roy in New York at

BlackRock’s Fink Warns of ‘Too Much Optimism’ in Markets

BlackRock’s Fink Warns of ‘Too Much Optimism’ in Markets

BlackRock Inc. (BLK) Chief Executive Officer Laurence D. Fink warned there is “way too much optimism” in financial markets as he predicted repeats of the market turmoil that roiled investors this week.

“The experience of the marketplace this past week is going to be indicative of this entire year,” Fink, 61, told a panel at the World Economic Forum in Davos, Switzerland today. “We’re going to be in a world of much greater volatility.”

Fink, who runs the world’s largest asset manager, spoke after a selloff in emerging markets that was triggered by concern about China’s economic growth and the Federal Reserve’s tapering of its monetary stimulus later this year. The MSCI World Index slid the most this week in five months.

As Davos delegates fretted about the robustness of economies from Turkey to Argentina, central bankers from the euro area, the U.K. and Japan used the stage to signal that monetary stimulus will remain in place.

“Interest rates will stay at the present or lower level for an extended period of time,” European Central Bank President Mario Draghi said. Bank of England Governor Mark Carney added “there’s no immediate need” to raise rates.

Global Outlook

Fink’s outlook challenged the relatively upbeat tone struck by others during the four-day gathering in the Swiss Alps, which began after the International Monetary Fund predicted the strongest world economic expansion since 2011. The meetings of the past seven years were clouded by jitters about financial crisis in the U.S. and Europe.

‘We can be cautiously optimistic about the global outlook,’’ Bank of Japan Governor Haruhiko Kuroda told the panel.

While Fink agreed “the overall trend is going to be fine,” he predicted “quite a bit of disruption” and said the onus was now on governments to work to improve economies.

“That troubles me, as there has been great consistency of dragging their feet by politicians,” he said. “The marketplace has been rather encouraged by good, consistent monetary policy across the world.”

Fink spoke a day after Goldman Sachs Group Inc. CEO Lloyd Blankfein told Bloomberg Television that the week’s fall in markets wasn’t surprising because asset values had risen sharply.

‘Very Abnormal’

“It would be very abnormal if we didn’t have consolidating moves in the assets that have gone up so much,” he said.

Fink predicted the U.S. economy will grow more than 3 percent this year and said the world’s economy had benefited from a soft dollar. By contrast, Europe needs a weaker currency and the euro at $1.36 is “unsustainable,” he said.

Appearing on the same panel, IMF Managing Director Christine Lagarde said central banks should continue to keep monetary policy loose until growth becomes well-anchored and then communicate their exit strategies clearly. She warned the risk of global deflation may be between 15 and 20 percent.

Draghi rebuffed speculation the European economy faces the threat of a prolonged decline in consumer prices. He noted that inflation excluding energy and food prices had been as low now as in the wake of past financial strains and that much of its decrease the result of downward pressure on prices in crisis-hit Greece, Ireland, Spain and Portugal that may reverse.

“Our accommodative monetary policy will remain so,” Draghi said. If the economy or markets deteriorate “we are ready and willing to use all the instruments our treaty allows.”

As for the U.K., which has recently displayed signs of economic strength, Carney said “exceptional stimulus remains very relevant.” He cited headwinds including spare capacity, sluggish European demand and tighter monetary conditions, including a strengthened pound. Even when the Bank of England does raise rates “any such increase would be gradual,” he said.

To contact the reporters on this story: Catherine Bosley in Davos, Switzerland at; Jana Randow in Davos, Switzerland at

A critical comment on The Economist’s special report on tech startups by Daniel Isenberg, who created the entrepreneurship ecosystem project at Babson Executive Education

A critical comment on The Economist’s special report on tech startups

Jan 23rd 2014, 14:20 by Daniel Isenberg

Daniel Isenberg, who created the entrepreneurship ecosystem project at Babson Executive Education, thinks that our special report on tech startups, “A Cambrian moment”, promulgates the misimpression that entrepreneurship is exclusively, or even largely, about small, accelerated, lean social media startups. We invited him to write a reply.

THE distinction between tech and non-tech entrepreneurship is false. Today, every business venture, entrepreneurial or otherwise, requires technology to be competitive, whether it is diamond trading, transportation, construction, or energy. There is nothing intrinsically more technological about Twitter and Facebook, say, than about Harley-Davidson or American Express. In fact, medical devices and alternative energy are arguably more technology-intensive, generically, than any of the report’s wide-eyed examples. Furthermore, for any business, anywhere, ignoring the opportunities and necessities presented by technology is backing light speed into oblivion, and no different than ignoring the existence of electricity or cars. And research is showing that as many, if not more, social and economic benefits of entrepreneurship accrue from non-tech entrepreneurship and that the new public policy focus on startups may be badly misplaced.

Entrepreneurship and startups are not one and the same. Many startups are not entrepreneurial and much entrepreneurship is not about startups. In 1999 Icelander Robert Wessman came home from Germany, took over a badly teetering generic pharmaceuticals company with one product in the market, poured his life savings and house into it (and a lot of outside cash) and within eight years grew it 100 times into a global leader with 11,000 employees, 650 products, operations in 40 countries, over $2 billion in sales, and fifth in the world (ACT, now number 3, market capitalisation of $30 billion, not too far from Facebook’s about a year ago). In 2001 Ron Zwanziger founded Inverness Medical (now Alere) out of the leftover assets from the $1.3 billion sale of his glucose-monitoring business (OneTouch) to Johnson & Johnson: today Alere is worth $3 billion.

There is a startup traffic jam. What seems to be clear is that there has been a sharp increase in the ranks of tech starts, a trend that may continue. What is less clear is whether this is generally beneficial to entrepreneurs or society, contrary to what the report strongly implies. Leaving aside whether iPhone-based lute-tuning is a market-maker (we’ll let the market sort that out), it is very likely that the on-ramp of startups has been jam packed, while the actual speed on the highway has not been impacted at all. In fact, the entire highway just may move more slowly as a result of the startup glut—that is, firms that have the wherewithal to scale into socially and economically valuable ventures, may just be slowed down by the on-ramp traffic build up, the hype, and the valuable resources startups tie up.

Scaling up is vastly harder than starting up. What is much more certain is that, as anyone who has tried, as I have, can tell you, starting up a venture is just the first baby step on a long hard trudge to scale up. But without the ability to scale way beyond start, all the blood, sweat and tears (and money) will be flushed right down the drain. The Economist does warn us that starting up a venture is back breaking, but that start is such a short leg of the journey: back-breaking during your first months is nothing compared to running the entire marathon with your startup-broken back. It typically takes a decade or longer, not months or a couple years, to build a venture of value, with any semblance of robustness and return. The few that pop through in a few years are by far the aberration. For that matter, Silicon Valley may be the aberration.

There is little fundamentally new in entrepreneurship just because some of it happens faster. Everything happens faster, all the time, and almost always has. Entrepreneurs, as long as there has been human society, have always raced to take advantage of inefficiencies and overlooked opportunities to do something that in prospect looks startlingly wonderful and in hindsight kind of obvious. Three millennia ago Phoenician entrepreneurs set sail to build global businesses base on innovations in stellar navigation, silver ore extraction, and marvellously fast Tyrian purple dye extracted from shellfish bile. Entrepreneurship is always surprising: in fact, if it’s predictable, it probably isn’t entrepreneurship.

There is nothing new about starting lean. That is how my grandfather and generations before and after launched their businesses—know your customer, take small incremental risks, adjust your products as you go, and be capital efficient. That’s what I learned in Israel in the early 1980s from Stef Wertheimer, who sold his wholly-owned Iscar to Warren Buffett in 2006 for $6 billion in cash: work hard to get one fantastic customer by knocking his socks off with your product, and don’t monkey around with fancy finances until you do. It is uncalled for to “discover” a “new” form of entrepreneurship just because of the venture capital excesses (known only with 20/20 hindsight) of the late 1990s. And most ventures that scale big fast need substantial capital in some form, anyway (bank debt as much as risky equity capital). Maybe in a few years someone will write a book about fat scale ups.

Platforms are all around us. Every city planner knows that one of the biggest economic development platforms is the metro system around which blossom huge ecosystems of work, life and play. Walmart is a platform for thousands of suppliers, as are the movie industry in Hollywood and fresh water in Wisconsin. Malls are platforms. Just because the platforms are digital doesn’t make the phenomenon fundamentally new.

Finally, entrepreneurship is extraordinary value creation and capture, which almost always entails a few people taking a scary personal risk on some assets (ideas, reputation, cash, or whatever) which the market undervalues. The entrepreneur is almost always swimming against the current. There is no explosion suddenly pushing him or her along, Cambrian or otherwise. The Silicon Valley “model” has been around for about a century, 541.999 million years after the Cambrian “explosion” that took 50 million years, give or take 30 million. If indeed it did happen at all.


Emerging markets: The perils of denial

Emerging markets: The perils of denial

Jan 24th 2014, 16:11 by Buttonwood

THE big sell-off in emerging market currencies yesterday is an odd example of “remembrance of things past”; one’s mind is drawn back to 1998, or even 1982 and the crises of old. Not that long ago, it was the developed economies that were causing all the problems and the emerging markets that seemed to offer hope; now the news out of the rich world is a lot more positive whereas the weaknesses of some developing countries are showing again.

Margaret Thatcher is not a popular heroine in Argentina but it is tempting to recall her aphorism that “you can’t buck the markets”. The country was running with an exchange rate that was (and still is) out of whack with the black market rate; its government was also quoting an inflation rate that was well below independent estimates of 23.4%. Defending the exchange rate required official intervention that was eating away at the country’s reserves. Yesterday, the authorities stopped intervening; today, they relaxed capital controls. While there was brave talk that a rate of 8 pesos to the dollar was fair value, the black market rate is more like 13. The scope for the official rate to fall dramatically is clear. The big question concerns the economic consequences of the devaluation; will this lead to a big rise in the cost of imported goods (pushing inflation up further and putting more downward pressure on the peso) or does the cost of private sector goods already reflect the black market rate?

The other case of denial was in Turkey, where it seems clear the central bank would have liked to raise rates this week, but was discouraged from doing so by the government. Turkey has a current account deficit of 7.5% of GDP and inflation of 7.5%; monetary tightening looks appropriate. (The central bank indicated that it may allow interbank rates to hit 9% on some days, but they are normally 7.75%, ie, barely positive in real terms). Again, a big fall in the lira will boost Turkish exporters but creates the peril of a further surge in the inflation rate. The Turks have intervened to support the lira but how long can they do that; at $33 billion, their reserves are only a little larger than Argentina’s.

The broader question is whether these sell-offs are just “little local difficulties” or are a herald of a 1997/1998-style collapse? It is worth remembering that most emerging economies are sounder than they were 16-17 years ago, in the sense that they tend to have smaller current account deficits and are less dependent on inflows of hot money. But they are not homogenous. The countries that are suffering now are those with the worst policies or the most obvious weaknesses. For the sector as a whole, China is the giant panda in the room; there are worries about an investment product that may default at the end of this month. By itself, this seems unlikely to provoke panic; its travails are down to a specific investment, rather than hinting at a more broad malaise, along the lines of subprime loans. The Economist’s man in HK is not too worried.

But the stories have certainly created a risk-off mood in the stockmarkets; they did enter 2014 in remarkably optimistic mood.


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