NOVEMBER 16, 2013
THE READERS of business books are a fragile lot. They’re uncertain of their talents and the scope of human possibility, confused as to direction (they’re largely not one-percenters). Their anxieties lead them to seek reassurance from authors who project an understandable and manageable world. It is little surprise that business books resemble spiritual books — they are marked by a confident if not omniscient tone, they judge the unrighteous, they show us the way.
The six finalists for the 2013 Financial Times/Goldman Sachs Business Book of the Year Award all extend these comforts. They address the particular fears of the business and financial class that were triggered by the 2007 financial crisis and the very long, very slow return to normalcy. The crisis ripped apart the settled understanding of how the financial world worked; a longstanding period of steady growth lulled us into thinking economic disasters were a thing of the past. Housing values could never fall. Global trade expansion would finally deliver better lives to all. And Greenspan-inspired declarations of the “end of the business cycle” heralded a new era. The high priests who made it all happen — the Greenspans — seemed to have finally accessed the Truth of optimal policy mix.
When did we lose sight of samsara? How could we have imagined we would escape the business cycle, or any other cycle, in the material world?
The financial crisis showed us that this new era had not arrived — and that the teachings and practices of those pre-crisis days were not sound. The most severe economic collapse in many decades is upon us (and it is not over yet). The gods have been angry — and we didn’t see it coming. The crisis of confidence, the crisis of not knowing our way, is a spiritual crisis. Each of these six authors displays a particular cosmological understanding. Each is hopeful for better days, for a restoration of harmony. They differ, as spiritual writers do, as to what happened and why — but explanation is not the exclusive end of their inquiries. Some see judgment, some hope.
Iain Martin’s Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy is pointedly a financial crisis read. The sky does fall on the Royal Bank of Scotland and, as Martin’s title suggests, on the broader British economy. Fred Goodwin, the CEO of the Royal Bank of Scotland, is filled with pride (including pride in Scotland) — and we all know where that leads. He takes RBS through years of spectacular growth, transforming it from a small, hidebound institution serving Scottish interests into (for a time) Britain’s largest bank. He worships growth for growth’s sake — and the easy profits of complex mortgage securitizations. Goodwin is a banker with no taste for banking; he is an innovator who is content to leave traditional banking behind. The course proves false, of course, and the utter destruction of the Royal Bank of Scotland can only be witnessed with horror. Martin makes sense of this — but even he can’t quite believe it all happened; that Goodwin and RBS could have risen so high, that their madness would have continued so long without check. Martin is not surprised by the result, however; he joins in the wrathful judgment of Goodwin and RBS, and so moral order is restored.
Fred Goodwin is not a nice guy; virtually everyone who figures in the book agrees to this estimation. He is a control freak, one who would cruelly berate a manager for the smallest overlooked detail. And Goodwin knew very little about banking — again on this most all agree. Goodwin’s focus was on growth, shattering earnings targets, and — like Mel Gibson’s Braveheart — winning glory for Scotland. Of course it wasn’t all Goodwin’s fault, or at least not his fault alone; other ambitious bankers were crushed by the collapse of mortgage-backed securities. One wonders if Martin’s focus on Goodwin in Making It Happen is more due to the perverse appeal of Goodwin’s absolutely disagreeable personality. I am dubious about the “value” of any particular CEO, for good or bad. But this is where Martin’s interest lies: as his subtitle suggests, this book is as much or more the Fred Goodwin story than it is the RBS story (or indeed the story of “blowing up” the British economy).
When RBS sandbagged the British economy, it did so because politicians decided it was too big to fail. The resultant nationalization of RBS is today fait accompli; the lingering question is whether RBS should be broken up. It is British pride (centered around maintaining London as the global financial center), not Scottish pride, that now drives the determination to maintain RBS as a megabank.
Anita Raghavan gives us another morality play — this one affecting a particular tribe. The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund explores the rise and fall of one of the stars of the Indian-American community, Rajat Gupta, as he is drawn into the shadowy world of Galleon Fund–master Raj Rajaratnam. Rajaratnam’s Truth is that you only win in Wall Street by cheating. Why, Raghavan asks, would Gupta risk all his success and standing by joining Rajaratnam’s insider information ring? Her answer, it seems, is a thirst for even more glory — and a hidden moral flaw, inherited from Gupta’s father. Gupta too is destroyed, as this can be the only satisfactory conclusion to a morality play.
Raghavan’s story necessarily simplifies the grander affair — and perhaps she has distorted things by highlighting the South Asian backgrounds of the individuals she covers (Rajaratnam is Sri Lankan, not Indian-American). Raghavan’s leading actors include Gupta, Anil Kumar (who “sings” to the authorities), Rajaratnam, Sanjay Wadhwa at the SEC, and Preetinder Bharara, the federal prosecutor. The Godfather had more ethnic diversity. As depicted, we view a network of South Asian immigrants, linked by common experiences (elite schools in Asia, then Wharton and Harvard MBA programs) and — more to the point — knowing each other intimately.
The story of the downfall of Rajaratnam and Gupta is placed within a larger examination of the emergence of Indian Americans in US society. As Raghavan’s title suggests, she is concerned with the elite immigrants: the top graduates of India’s superb educational institutions whose migrations constitute — from India’s perspective — a tragic brain drain, but who have found unimagined success in the United States. For the greater part, she celebrates the former South Asians as a “model minority”: hardworking, disciplined, energetic, focused. But the seeds of self-destruction are present as well: the drive to succeed conflates with the insatiable quest for ever-greater status and wealth. And, for most of Raghavan’s fallen characters, the usual consequences follow.
Big Data: A Revolution That Will Transform How We Live, Work, and Think is a rather mystical tract by Viktor Mayer-Schönberger and Kenneth Cukier. We are surrounded by Big Data — our history of GPS locations, Google searches, Netflix downloads, and Amazon purchases. And we can be reconstructed from our Big Data. Mayer-Schönberger and Cukier are willing to abandon theory, no account needed of causality. But they resolutely believe in prediction; those who can read Big Data will know the future. (Want to know if a hurricane is on the way? Watch strawberry Pop-Tart sales.) Indeed, Mayer-Schönberger and Cukier accept the presence of mystery — our job is not to theorize (for explanation leads us nowhere), but simply to follow what Big Data reveals. As with the stars, there is pattern, there is order, there is the past and the future to be found in Big Data.
But this can be dangerous. The financial crisis clearly demonstrated the weakness of any presumption of continuity; the past does not always point to the future. Mayer-Schönberger and Cukier invite us to let data “speak,” as if all that is required of us is attentiveness. But what was true at Delphi remains true with Big Data: the data only responds to the questions asked of it. And there is an innately human element in the formation of the question, even if the “question” asked is an open search for correlations. Big Data is bursting with correlations — strange linking of events liberated from explanation. Here work portents and charms.
Neil Irwin sees inspired human agency in The Alchemists: Three Central Bankers and a World on Fire. Irwin begins his book with the financial crisis, as the earth trembles. His central bankers are up to the task: they challenge, they curse, they command. The three — Ben Bernanke, Jean-Claude Trichet, and Mervyn King — confront the crisis. They invent new tools when old tools fail. These are special men. They enjoy (what is known in the world of central banking as) “independence”; that is, they do not take instructions from their respective political leaders. They can and do ignore the wishes of presidents and prime ministers. Central bankers form an elite, technocratic priesthood; they only look upward for guidance. And they have real power — perhaps greater power than political leaders. In Irwin’s story, Bernanke, Trichet (followed by Mario Draghi), and King encounter a devastated landscape, spoiled by politicians and bankers; their mission is to restore cosmic order. They are consummate technicians — they do things because they believe them to be the correct course of action. They ignore opinion polls but cannot, of course, ignore the markets. These bankers do manage, at least in Irwin’s account, to largely have their way in responding to the crisis, through will and manipulation, and by playing on the palpable belief that no one else has any better idea of what to do. And they do so most often out of the public eye; central bankers do hide themselves away. While Irwin manages access (at least after the fact), he reports little ongoing respect for transparency beyond Delphic Fed-speak, which is mimicked by the European Central Bank.
As the central bankers thrust and parry, we are invited to applaud their audacity, their creativity, and their resolve. Irwin somewhat understates the recurrent slips into illegality. One could of course fetishize legal compliance, and compliance demanded in ordinary times may be inappropriate in emergency. Irwin gets the emergency right — the reader takes away the sensation that, as bad as things were, they could have gone worse. How comforting it is to know — whereas the world is mysterious to you and me — that there is someone with special access to the greater Design: someone who understands, or failing that, decides.
Brad Stone’s title, The Everything Store: Jeff Bezos and the Age of Amazon, has an Aquarian ring to it. He portrays Amazon CEO Jeff Bezos as introducing a new moral reasoning. Stone’s book starts as a prosecutor’s dream — it is a catalogue of Bezos and Amazon’s unfair business offenses (were such behavior disciplined today): predatory pricing, refusal to deal, price fixing. But the justification offered for their appalling behavior (and this is more than just a legal argument) depends on the enormous benefit Amazon showers on the consumer. For this is the mystery of Amazon: Amazon is a company that is not profitable — Bezos’s personal wealth results from the market value of his Amazon shares — and Amazon delivers amazing service and amazing value to its customers. (Yes, I am a fan; I’m even a somewhat foolish Amazon Prime member.) There is a flow-through that immunizes Amazon — and Jeff Bezos — from public scorn.
Bezos, in Stone’s portrait, is a woeful human agent who channels a greater force. His relentless efforts are focused on delivering value to his customers. In so doing, Bezos understands their emptiness, their hunger. In the end, what he delivers is commonplace substance: books and recordings, shoes and online content. But he wraps these goods in the lowest prices and the fastest delivery. And what can surpass one-click shopping? Everything, promises Bezos, can be found at Amazon, and he comes close to fulfilling that promise.
It frightens me how well Bezos knows me. (Amazon knows me better than Google, the company that “reads” all my email.) Bezos knows me to my soul: my obsessions, my losses of control. I need not enter a confessional; I just click. And like a laboratory animal, I hit the pleasure button over and over again. I am — we are — complicit in Amazon’s new way of doing business. Bezos abjures the old business morality and the earning of profits; these will be washed away through a higher justification. The collective enjoyment we derive from Amazon is our new commonwealth.
Sheryl Sandberg’s Lean In: Women, Work, and the Will to Lead is an ardent call for reform. Sandberg, a top executive at Google and Facebook, is a take-all winner, one who managed to burst through the glass ceiling. But she sees so many women around her who failed to speak up, who made unneeded compromises and veered off track. And she knows even more women damaged by unrealizable “have it all” fantasies. Sandberg calls on each of us to “lean in” — to remain ambitious for one’s personal career and devoted to establishing a more equal society. Lean in and a better world awaits. And by reforming American business, we shall reform America itself.
Success for Sandberg’s reform is not to be measured as would be success for Facebook or Google: it is not a question of toting up page views or market capitalization. And it may or may not be reflected in eventual numbers. One wonders if Sandberg (like most successful people) understands exactly what fell into place to vault her to the top. But she knows reform starts inside: one can only achieve success if one knows success awaits. Lean In is, in the end, a book about virtue. And in many moral systems, virtue offers no particular promise of reward, save an ennobling effect of the virtuous person herself.
Our six long-listed authors — in this cartoon treatment — present us with religious characters. Fred Goodwin departs from the straight and narrow (of a Scottish Presbyterian kind) and leads the Royal Bank of Scotland to its destruction. Rajat Gupta is tempted by Raj Rajaratnam to place himself outside the moral limits of Wall Street and is personally destroyed. The prophets of Big Data access a greater knowledge and with it peer into our future. The central banker Alchemists are cut off from the people whose destinies they manage — and restore order by following their inspiration. Jeff Bezos satisfies a hunger of the masses by building an Everything Store — isn’t this what a church is? And Sheryl Sandberg is a reformer who knows true reform is built soul by soul.
[The winner was announced two days after this piece was published: Brad Stone’s The Everything Store.]
Jeffery Atik is an essayist and playwright based in Los Angeles. He is a professor of international law at Loyola Law School.