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In Defense of Murdoch

Posted on June 7, 2012 in Slash.Dash

NEW YORK — Fair warning: This column is a defense of Rupert Murdoch. If you add everything up, he’s been good for newspapers over the past several decades, keeping them alive and vigorous and noisy and relevant. Without him, the British newspaper industry might have disappeared entirely.


This defense is prompted in part by seeing everyone piling in on the British hacking scandal, as if such abuses were confined to News International (we shall see) and as if significant swathes of the British establishment had not been complicit. It is also prompted by having spent time with Murdoch 21 years ago when writing a profile for The New York Times Magazine and coming away impressed.

Before I get to why, a few caveats. First, the hacking is of course indefensible as well as illegal. Second, Fox News, the U.S. TV network started by Murdoch, has with its shrill right-wing demagoguery masquerading as news made a significant contribution to the polarization of American politics, the erosion of reasoned debate, the debunking of reason itself, and the ensuing Washington paralysis. Third, I disagree with Murdoch’s views on a range of issues — from climate change to the Middle East — where his influence has been unhelpful.

So why do I still admire the guy? The first reason is his evident loathing for elites, for cozy establishments, for cartels, for what he’s called “strangulated English accents” — in fact for anything standing in the way of gutsy endeavor and churn. His love of no-holds-barred journalism is one reason Britain’s press is one of the most aggressive anywhere. That’s good for free societies.

Murdoch once told me: “When I came to Britain in 1968, I found it was damn hard to get a day’s work out of the people at the top of the social scale. As an Australian, I only had to work 8 or 10 hours a day, 48 weeks of the year, and everything came to you.”

So it was easy enough, from 1969 onward, to rake in the media heirlooms. Along the way he’s often shown fierce loyalty to his people — as now with Rebekah Brooks, the embattled head of News International — and piled money into important newspapers like The Times that would otherwise have vanished.

The second thing I admire is the visionary, risk-taking determination that has placed him ahead of the game as the media business has been transformed through globalization and digitization. It’s been the ability to see around corners that has ushered him from two modest papers inherited from his father in Adelaide to the head of a company with about $33 billion in annual revenues.

Yes, there have been mistakes — MySpace, the social media site just sold for a fraction of its purchase price is one. But I’d take Murdoch’s batting average. He’s gambled big on satellite TV, on global media opportunities in sports, and on the conflation of television, publishing, entertainment, newspapers and the Internet. British Sky Broadcasting and Fox alone represent big businesses created from nothing against significant odds.

A favorite Murdoch saying is: “We don’t deal in market share. We create the market.”

Of course, his success makes plenty of people envious, one reason the Citizen Kane ogre image has attached to him. (He would have endorsed Kane who, when asked in the movie how he found business conditions in Europe, responded: “With great difficulty!”) His success has caused redoubled envy in Britain because there he is ever the outsider from Down Under. (America doesn’t really do outsiders.)

The Times, which I’ve found a good read since moving to London last summer, has impressed me with its continued investment in foreign coverage, its bold move to put up a pay wall for the online edition (yes, people should pay for the work of journalists), and with the way the paper plays it pretty straight under editor James Harding. The Telegraph to the right and Guardian to the left play it less straight.

British Sky Broadcasting is emphatically not Fox. It’s a varied channel with some serious news shows. Overall, the British media scene without Murdoch would be pretty impoverished. His breaking of the unions at Wapping in 1986 was decisive for the vitality of newspapering. He took The Times tabloid when everyone said he was crazy. He was right. He loves a scoop, loves a scrap, and both the Wall Street Journal and The Times show serious journalists can thrive under him.

But Murdoch’s in trouble now. An important deal for all of British Sky Broadcasting hangs on his being able to convince British authorities News Corp management is in fact reputable. He’ll probably have to sacrifice Brooks for that. Politicians who fawned now fulminate. Prime Minister David Cameron is embarrassed. Both Murdoch and his savvy son James Murdoch (of more centrist views than his father) are scrambling.

I’d bet on them to prevail. When I asked Murdoch the secret of TV, he told me “Bury your mistakes.” The guy’s a force of nature and his restless innovations have, on balance and with caveats, been good for the media and a more open world.

By ROGER COHEN

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When a Boy Found a Familiar Feel in a Pat of the H…

Posted on May 26, 2012 in Slash.Dash
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We Are All Nuns

Posted on May 2, 2012 in Slash.Dash

CATHOLIC nuns are not the prissy traditionalists of caricature. No, nuns rock!

They were the first feminists, earning Ph.D.’s or working as surgeons long before it was fashionable for women to hold jobs. As managers of hospitals, schools and complex bureaucracies, they were the first female C.E.O.’s.

They are also among the bravest, toughest and most admirable people in the world. In my travels, I’ve seen heroic nuns defy warlords, pimps and bandits. Even as bishops have disgraced the church by covering up the rape of children, nuns have redeemed it with their humble work on behalf of the neediest.

So, Pope Benedict, all I can say is: You are crazy to mess with nuns.

The Vatican issued a stinging reprimand of American nuns this month and ordered a bishop to oversee a makeover of the organization that represents 80 percent of them. In effect, the Vatican accused the nuns of worrying too much about the poor and not enough about abortion and gay marriage.

What Bible did that come from? Jesus in the Gospels repeatedly talks about poverty and social justice, yet never explicitly mentions either abortion or homosexuality. If you look at who has more closely emulated Jesus’s life, Pope Benedict or your average nun, it’s the nun hands down.

Since the papal crackdown on nuns, they have received an outpouring of support. “Nuns were approached by Catholics at Sunday liturgies across the country with a simple question: ‘What can we do to help?’ ” The National Catholic Reporter recounted. It cited one parish where a declaration of support for nuns from the pulpit drew loud applause, and another that was filled with shouts like, “You go, girl!”

At least four petition drives are under way to support the nuns. One on Change.org has gathered 15,000 signatures. The headline for this column comes from an essay by Mary E. Hunt, a Catholic theologian who is developing a proposal for Catholics to redirect some contributions from local parishes to nuns.

“How dare they go after 57,000 dedicated women whose median age is well over 70 and who work tirelessly for a more just world?” Hunt wrote. “How dare the very men who preside over a church in utter disgrace due to sexual misconduct and cover-ups by bishops try to distract from their own problems by creating new ones for women religious?”

Sister Joan Chittister, a prominent Benedictine nun, said she had worried at first that nuns spend so much time with the poor that they would have no allies. She added that the flood of support had left her breathless.

“It’s stunningly wonderful,” she said. “You see generations of laypeople who know where the sisters are — in the streets, in the soup kitchens, anywhere where there’s pain. They’re with the dying, with the sick, and people know it.”

Sister Joan spoke to me from a ghetto in Erie, Pa., where her order of 120 nuns runs a soup kitchen, a huge food pantry, an afterschool program, and one of the largest education programs for the unemployed in the state.

I have a soft spot for nuns because I’ve seen firsthand that they sacrifice ego, safety and comfort to serve some of the neediest people on earth. Remember the “Kony 2012” video that was an Internet hit earlier this year, about an African warlord named Joseph Kony? One of the few heroes in the long Kony debacle was a Comboni nun, Sister Rachele Fassera.

In 1996, Kony’s army attacked a Ugandan girls’ school and kidnapped 139 students. Sister Rachele hiked through the jungle in pursuit of the kidnappers — some of the most menacing men imaginable, notorious for raping and torturing their victims to death. Eventually, she caught up with the 200 gunmen and demanded that they release the girls. Somehow, she browbeat the warlord in charge into releasing the great majority of the girls.

I’m betting on the nuns to win this one as well. After all, the sisters may be saintly, but they’re also crafty. Elias Chacour, a prominent Palestinian archbishop in the Melkite Greek Catholic Church, recounts in a memoir that he once asked a convent if it could supply two nuns for a community literacy project. The mother superior said she would have to check with her bishop.

“The bishop was very clear in his refusal to allow two nuns,” the mother superior told him later. “I cannot disobey him in that.” She added: “I will send you three nuns!”

Nuns have triumphed over an errant hierarchy before. In the 19th century, the Catholic Church excommunicated an Australian nun named Mary MacKillop after her order exposed a pedophile priest. Sister Mary was eventually invited back to the church and became renowned for her work with the poor. In 2010, Pope Benedict canonized her as Australia’s first saint.

“Let us be guided” by Sister Mary’s teachings, the pope declared then.

Amen to that.
By NICHOLAS D. KRISTOF

We Are All Nuns

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Why I Am Leaving Goldman Sachs

Posted on March 21, 2012 in Slash.Dash


TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs.Another sign that it was time to leave.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.

My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

By GREG SMITH

via. “NewYork Times”.

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Is Banking Bad? By NICHOLAS D. KRISTOF

Posted on February 24, 2012 in Slash.Dash

When I spoke at Swarthmore College recently, I was startled by one question: Is it immoral for students to seek banking jobs?

The corollary question, with Mitt Romney’s business career under attack even by staunch Republicans, is this: Is it unethical to make millions in private equity?

My answer to both questions: no.

I’ve been sympathetic to the Occupy Wall Street movement, but, look, finance is not evil. Banking has contributed immensely to modern civilization. By allocating capital to more efficient uses, banking laid the groundwork for the industrial revolution and the information revolution.

Likewise, the attacks on private equity seem over the top. Private equity firms like Bain Capital, where Romney worked, aren’t about destroying companies and picking over the carcasses. Rather, the aim is to acquire poorly managed companies, make them more efficient (sometimes by firing people but often by rejiggering the business model) and then resell them at a profit. That’s the merciless, rugged nature of capitalism.

Liberals should also be wary of self-selecting out of certain occupations. After Vietnam and revelations of C.I.A. abuses in the 1970s, many university students avoided the military and the intelligence agencies. So slots were filled disproportionately by ideological conservatives in a way that undermined everyone’s interests. We would have been better off if more Swarthmore idealists had become generals and C.I.A. officers — and we may be better off if some idealists become bankers as well.

Now for my caveats.

When young people go into finance, I hope that they’ll show judgment, balance and principles instead of their elders’ penchant for greed and rigging the system. Just as Communists managed to destroy Communism, capitalists are discrediting capitalism.

A Pew Research Center poll in December found that only 50 percent of Americans reacted positively to the term “capitalism,” while 40 percent reacted negatively. Among Americans ages 18 to 29, more had a negative view of capitalism than a positive view, the survey found. Those young Americans actually viewed socialism more positively than capitalism. In other words, America’s grasping capitalists are turning young Americans into socialists.

The Financial Times recently published a series about “capitalism in crisis.” It noted that the Edelman Trust Barometer, a survey, found that only 46 percent of Americans had confidence in business to do the right thing (and only 25 percent trusted banks).

Public skepticism is warranted, in my view. Corporations have vastly overpaid C.E.O.’s, handsomely rewarding not only success but also failure. Banks that helped cause today’s financial mess lobbied successfully for bailouts for themselves; they privatized profits and socialized losses.

Meanwhile, more than four million families have lost their homes to foreclosure, according to Zillow.com, a real estate company. Bankers and shareholders found a safety net, but not working-class families. One reason is that the campaign finance system allows financiers to buy access and special favors. If you’re a tycoon, your best investment often is a lobbying firm in Washington to create a tax loophole for you. The last few years have been a showcase not of capitalism itself, but of crony capitalism.

Romney’s average tax rate, which he says is probably about 15 percent, exemplifies the problem. The Romneys benefit because capital gains tax rates have been slashed to just 15 percent, much lower than rates paid on labor income.

Then there’s the most egregious tax loophole of all, for “carried interest.” A triumph of lobbying, it allows private equity and hedge fund managers to pretend that their labor income is a capital gain. So they sometimes pay a tax rate of just 15 percent, compared with up to 35 percent for almost everyone else.

Granted, young people haven’t been pouring into finance in recent years out of eagerness to reform this rigged system but to milk it. In 2007, on the eve of the financial crisis, 47 percent of Harvard’s graduating class headed for consulting firms and the financial sector — a huge misallocation of human capital. However well-meaning these new graduates are initially, they often end up caught up in the scramble at the trough.

In the postwar years, labor unions became greedy and rewarded themselves with feather-bedding and rigid work rules — turning much of the public against them. Likewise, Wall Street feather-bedding is tarnishing the public image of banks and business and undermining confidence in capitalism itself.

When financiers rig the system, they should remember the warning of John Maynard Keynes: “The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”

So university students would be wrong to mock their classmates who choose Citigroup over CARE. Banking and private equity aren’t evil, and I would never urge college students to stay away. Maybe today’s young socialist sympathizers, along with healthy regulation and a loud public outcry, can help rescue capitalism from the crony capitalists.

via. “New York Times”.

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