America remains the world’s richest large country. It’s generally estimated to have a per capita GDP level around $45,000, while the richest European nations manage only a $40,000 or so per capita GDP (setting aside low population, oil-rich states like Norway). Wealth underlies America’s sense of itself as a special country, and it’s also cited as evidence that America is better than other economies on a range of variables, from economic freedom to optimism to business savvy to work ethic.

But why exactly is America so rich? Karl Smith ventures an explanation:

I am going to go pretty conventional on this one and say a combination of three big factors

1. The Common Law

2. Massive Immigration

3. The Great Scientific Exodus during WWII

{ The Economist | Continue reading }

related { 5 Myths about the Fed }

photo { Young Kyu Yoo }

The euro zone’s debt crisis deepened on Tuesday as investors pushed the spreads on Spanish, Italian and Belgian bonds to euro lifetime highs and Portugal warned of “intolerable risks” facing its banks. (…)

Two days after the bloc approved an 85 billion euro ($111.7 billion) emergency aid package for Ireland, worries about contagion to Portugal and Spain persisted and the borrowing costs of large countries like Italy and France shot higher.

Markets are already discounting an eventual rescue of Portugal although the government in Lisbon denies, as Irish leaders initially did, that the country needs outside aid. (…)

Eurointelligence, an online commentary service, said markets were growing increasingly concerned about the solvency of euro zone peripheral states after focusing mainly on their short-term liquidity problems in past weeks.

“We at Eurointelligence consider a default of Greece, Ireland and Portugal a done deal,” they wrote on Tuesday. “The question is only now whether Spain can scrape through.”

{ Reuters | Continue reading }

related { The Eurozone Endgame: Four Scenarios }

The documents of Mozart’s life — letters, memoirs of friends, portraits, bureaucratic files — have long been scrutinized at a microscopic level. So when his name was discovered two decades ago in a Viennese archive from 1791, it caused a stir.

The archive showed that an aristocratic friend and fellow Freemason, Prince Karl Lichnowsky, had sued Mozart over a debt and won a judgment of 1,435 florins and 32 kreutzer in Austrian currency of the time (nearly twice Mozart’s yearly income) weeks before the composer died.

The entry was a mystery. No other information about the judgment has come to light, although scholars have generally assumed that it concerned a loan connected with a trip the two men made to Berlin.

Now a Mozart scholar, Peter Hoyt, has come up with a theory about the details: that the judgment stemmed from a loan of 1,000 thalers in Prussian currency made on May 2, 1789, the day the prince and his coach departed Berlin without Mozart, leaving him in need of money for his own transportation.

If true, the conclusion could add depth and texture to our understanding of Mozart’s anxieties over financial problems at the end of his life and of his reception during one of his last journeys.

{ NY Times | Continue reading }

The World in 2036

Most of the technologies that are now 25 years old or more will be around; almost all of the younger ones “providing efficiencies” will be gone, either supplanted by competing ones or progressively replaced by the more robust archaic ones. So the car, the plane, the bicycle, the voice-only telephone, the espresso machine and, luckily, the wall-to-wall bookshelf will still be with us.

The world will face severe biological and electronic pandemics, another gift from globalisation. (…)

Companies that are currently large, debt-laden, listed on an exchange and paying bonuses will be gone. Those that will survive will be the more black swan-resistant—smaller, family-owned, unlisted on exchanges and free of debt. There will be large companies then, but these will be new—and short-lived. (…)

Science will produce smaller and smaller gains in the non-linear domain, in spite of the enormous resources it will consume; instead it will start focusing on what it cannot—and should not—do.

{ Nassim Taleb| Continue reading }

artwork { David Askevold, The Ghost Of Hank Williams, 1979 }

Imagine American history without organized crime. (…)

In Chicago and New York, Italian and Jewish gangsters operated many of the most important early jazz clubs. Al Capone, who controlled several of the clubs in Chicago that introduced jazz to mainstream audiences, was an aficionado of the music and was the first to pay performers a better than subsistence wage. (…) According to the scholar Jerome Charyn, “There would have been no ‘Jazz Age,’ and very little jazz, without the white gangsters who took black and white jazz musicians under their wing.” (…)

Though famous for their ultra-masculinity, gangsters were nonetheless instrumental in fostering and protecting the gay subculture during the hostile years of World War II and the 1950s. Vito Genovese and Carlo Gambino, leaders of the largest and most powerful crime families in New York, began investing in gay bars in the early 1930s.

By the 1950s, most of the gay bars in New York were owned by the mob. Because of the mafia’s connections with the police department and willingness to bribe officers, patrons of mob-owned bars were often protected from the police raids that dominated gay life in the 1950s.

{ Thaddeus Russell | Continue reading }

Having failed to construct a firebreak in Greece, the Europeans are hoping that they can stop the euro crisis in Ireland. But, even as an Irish rescue package is put together, the bond markets are already looking with unhealthy interest at Portugal. After Portugal, Spain is assumed to be next. And, if a really big economy such as Spain needed to call the financial fire brigade, the whole future of the euro would be in serious peril.

The question of “how this ends” is therefore obvious and urgent – but also fiendishly difficult to answer. It is like watching a three-dimensional game of chess – in which the financial, economic and political levels all interact with each other. (…)

My current best guess is that the single currency will indeed eventually break up – and that the euro’s executioner will be Germany, the most powerful country and economy inside the European Union.

If the Germans became convinced that their eurozone partners were simply impossible to deal with – and that therefore the whole single currency experiment could not work – they might decide to quit. There are two ways I could imagine this happening.

The first is a successive wave of financial crises across the eurozone, affecting larger countries, which gradually sap German taxpayer confidence that the “loans” that the EU is extending to its weaker members will ever be repaid. The second is if, as seems quite likely, the treaty changes that the German government is demanding to satisfy its courts fail to be ratified by some of the other 26 EU members.

{ Financial Times | Continue reading }

It seems that the European bailout buck will stop with Portugal for one simple reason (…) From Dow Jones: “The European emergency fund, promoted as having the financial firepower to douse a financial crisis in the euro zone, may not even have enough money to cover a bailout of Spain.” (…)

Of course, if and when Spain is bailed out, other bail outs will be irrelevant, as at that point the vigilantes will focus squarely on Germany. At that moment, nothing less than a complete dissolution of the currency union and an unmitigated monetization ala Weimar will save what is left of the productive powers remaining in Europe.

{ Zero Hedge | Continue reading }

Rupert Murdoch, head of the media giant News Corp, and Steve Jobs, the chief executive of Apple, are preparing to unveil a new digital “newspaper” called the Daily at the end of this month, according to reports in the US media.

The collaboration, which has been secretly under development in New York for several months, promises to be the world’s first “newspaper” designed exclusively for new tablet-style computers such as Apple’s iPad, with a launch planned for early next year.

{ Guardian | Continue reading }

photo { Jessica Hische }

Flops lose studios insane amounts of money. Flops have irrevocably hurt the careers of filmmakers and actors, with the bewildering exception of John Travolta. (…)

A big enough bomb can have a permanent, negative impact not just on someone’s career, but on the entire film industry: Michael Cimino’s notorious 1980 flop “Heaven’s Gate” was so expensive ($44 million, a fortune at the time) and disastrous (earning almost nothing back) it essentially bankrupted United Artists. It only took one flop for Cimino, fresh from winning best picture and best director Oscars for “The Deer Hunter,” to go from the hottest filmmaker in Hollywood to persona non grata. Cimino’s career never really recovered; he hasn’t directed a film since 1996’s “The Sunchaser” and today is a veritable recluse.

So it might seem surprising, or even perverse, to suggest that there’s something redeeming about flops — even, in fact, that we need them. (…)

An era’s great flops serve countless functions in pushing the art and industry of filmmaking forward. They introduce technological innovations. They help filmmakers and actors — those that manage to work again, at least — learn how to maximize their strengths and minimize their weaknesses. And for the people involved in them, flops are something more than a wake-up call: They can even rescue a career.

{ Boston Globe | Continue reading }

Most of the men and women here — average age: 38 — have worked at agencies for more than a decade. Such tenure used to be considered an asset, but these days it’s more of a liability. They’re all well aware that coding is now prized over copywriting and that a résumé that includes Xbox and Google is more desirable than one featuring stints at BBDO or Grey.

Step one of their therapy, of course, is admitting there is a problem. (…)

The ad business became an assembly line as predictable as Henry Ford’s. The client (whose goal was to get the word out about a product) paid an agency’s account executive (whose job was to lure the client and then keep him happy), who briefed the brand planner (whose research uncovered the big consumer insight), who briefed the media planner (who decided which channel — radio, print, outdoor, direct mail, or TV — to advertise in). Then the copywriter/art director team would pass on its work (a big idea typically represented by storyboards for a 30-second TV commercial) to the producer (who worked with a director and editors to film and edit the commercial). Thanks to the media buyer (whose job was to wine-and-dine media companies to lower the price of TV spots, print pages, or radio slots), the ad would get funneled, like relatively fresh sausage, into some combination of those five mass media, which were anything but equal. TV ruled the world. After all, it not only reached a mass audience but was also the most expensive medium — and the more the client spent, the more money the ad agency made.

That was then. Over the past few years, because of a combination of Internet disintermediation, recession, and corporate blindness, the assembly line has been obliterated — economically, organizationally, and culturally. In the ad business, the relatively good life of 2007 is as remote as the whiskey highs of 1962. (…) “First the news business, then the music business, then advertising.”

{ Fast Company | Continue reading }

The German World War II general Erich von Manstein is said to have categorized his officers into four types.

The first type, he said, is lazy and stupid. His advice was to leave them alone because they don’t do any harm.

The second type is hard-working and clever. He said that they make great officers because they ensure everything runs smoothly.

The third group is composed of hard-working idiots. Von Manstein claims that you must immediately get rid of these, as they force everyone around them to perform pointless tasks.

The fourth category are officers who are lazy and clever. These, he says, should be your generals.

Discovering this information set me to wondering how General von Manstein’s categories might apply to business organizations today.

{ Stepcase Lifehack | Continue reading | Thanks Tim }

Other things came out: weekend are good, spending too much time alone is bad, illness is a major drain on your emotional well-being, and so is caring for another adult, or a child (major increases in worry and stress there). College graduates report more stress, and otherwise being a college graduation has no significant effect on your daily happy or sad events. Religion increases positive daily life events, but doesn’t decrease sadness or worry.

Smoking turned out to be a REALLY strong predictor of low emotional well-being, and came out regardless of income or education or anything else. (…)

The negative things in life seem to affect people making less than $75K a lot more than higher incomes. Things like headaches and illness are reported more frequently (but whether or not these are related to stress isn’t determined).

In addition, the pain of some life occurrences, like divorce or chronic disease, is made a LOT worse by being of lower income.

So basically, more money does NOT mean more problems, but at a certain level, less money DOES.

{ Scientopia | Continue reading }

Filing down horse teeth is a slobbery job. But Carl Mitz is grateful that he now has the undisputed legal right to do it.

This week, Mr. Mitz and three others won a three-year legal battle against the Texas Board of Veterinary Medical Examiners, which had sought to restrict the ancient craft of horse-teeth floating—an obscure job that involves filing a horse’s teeth to improve its bite—to licensed veterinarians. (…)

Texas, however, likely will continue to press the issue, meaning the victory could be fleeting. (…)

Horse-teeth floating is a lucrative job. Some practitioners say they can make $300,000 a year, and those who do it say it’s straightforward and requires no special training. But some veterinarians fear that unskilled floaters will damage the horse’s gums or strip away protective enamel.

{ Wall Street Journal | Continue reading }

photo { Audrey Corregan for Blend magazine, 2008 }

What do you need to succeed in business? A mixture of luck and good judgement, according to Mikhail Fridman, one of Russia’s richest men and currently head of the Alfa Group. Gorbachev’s 1980s reforms made private enterprise possible – Fridman and others like him did the rest, as can be seen from this transcript of his lecture at the Publishers’ Forum in Lvov.

I think that to become a major, very successful entrepreneur, you really need to be in the right place at the right time – a lot of things have to coincide. It would probably be difficult to become an entrepreneur in a small or a very poor country. The world is changing and becoming globalized, and the list of the richest people naturally includes Chinese, Indians, Americans and Russians – Russia is after all an enormous country with enormous resources. But the richest person in the world is the Mexican Carlos Slim, who is certainly not from the largest and richest country in the world. Nevertheless, from his beginnings in a small town he created an enormous business empire, which works practically all over the Latin American continent and successfully competes with representatives of other economies of the world, which are much larger and stronger. So I think that everyone present here who decides to devote his life to entrepreneurship has a chance of achieving virtually unlimited success.

But the most important thing is not how to become a major entrepreneur or head of enormous business projects, but how to become an entrepreneur in general. For this I believe it’s not so much the circumstances that are important, as a completely different quality – entrepreneurial talent.

{ oD Russia | Continue reading }

photo { Zackary Canepari }

Francis Wolle, active in the early 1850s, is considered the first inventor of the modern paper bag. Based in Pennsylvania, he cofounded the Union Paper Bag Machine Company in 1869, as well as becoming ordained as a deacon and following passions in entomology and botany. Union was supported financially by wealthy manufacturers, who thereby secured rights to patents secured by the company and divvied up the country into market segments to avoid direct competition. One of these characters was industrialist George West of Saratoga County, New York, also known as the “Paper Bag King.” (…)

The speed and scale of paper-bag production facilitated by Stilwell’s design was revolutionary for the industry. In The Growth of a Century (1894), for example, John A. Haddock describes the Paper Mill and Bag Factory of the Taggart Brothers’ Company in Watertown, NY: “In the bag-manufacturing room they have one machine that makes a bag with satchel-bottom, direct from the roll, at the rate of 3,600 finished bags per hour, completing with ease 25,000 fifty-pound flour sacks in ten hours.

{ MoMA | Continue reading }

photo { Beni Bischof }

Does the Fed print money? If so, how?

It’s true that the Fed is not literally printing the $20 bills that end up in your wallet. As a commenter on your own blog has noted, that’s the job of the Bureau of Printing and Engraving. But money includes both currency in circulation and the reserves that commercial banks keep on deposit at the Fed. By that definition, the Fed is indeed printing it.

Here’s how QE works. The Fed buys a $100 bond from Bank of America. The bond gets added to the Fed’s assets. Bank of America has an account at the Fed. The Fed, with a keystroke, puts a $100 into B of A’s account. Where did the money come from? Thin air. Bank of America can visit its friendly neighborhood Fed branch and withdraw that $100 in the form of bills and coins. So for practical purposes the distinction between currency and reserves is meaningless; the monetary base includes both.

{ Greg Ip/Reuters | Continue reading }

photo { Steven Ahlgren }

China may not matter quite as much as you think

It is hard to exaggerate the Chinese economy’s far-reaching impact on the world, from small towns to big markets. It accounted for about 46% of global coal consumption in 2009, according to the World Coal Institute, an industry body, and consumes a similar share of the world’s zinc and aluminium. In 2009 it got through twice as much crude steel as the European Union, America and Japan combined. It bought more cars than America last year and this year looks set to buy more mobile phones than the rest of the world put together, according to China First Capital, an investment bank.

In China growth of 9.6% (recorded in the year to the third quarter) represents a slowdown. China will account for almost a fifth of world growth this year, according to the IMF; at purchasing-power parity, it will account for just over a quarter. (…)

Since the crisis, China has shown that its economy can grow even when America’s shrinks. It is not entirely dependent on the world’s biggest economy. But that does not mean it can substitute for it.

{ The Economist | Continue reading }

photo { Thomas Prior }

Americans less healthy than English, but live as long or longer, study finds

Researchers found that while Americans aged 55 to 64 have higher rates of chronic diseases than their peers in England, they died at about the same rate. And Americans age 65 and older — while still sicker than their English peers — had a lower death rate than similar people in England, according to findings published in the journal Demography. (…)

“If you get sick at older ages, you will die sooner in England than in the United States,” Smith said. “It appears that at least in terms of survival at older ages with chronic disease, the medical system in the United States may be better than the system in England.”

{ EurekAlert | Continue reading }

Something has been bothering me lately and it is our assumption that China is the world’s next superpower and that we’d darned well better get used to it. Hogwash. We’re into the Chinese decade, not the Chinese Century.

The century belongs to India. (…)

China has the population, the will, the educational system, the foreign currency reserves — everything to make it the next global superpower except two things: 1) an emerging middle class generation comparable to our Baby Boomers, and; 2) a functional diaspora (look it up, I’ll wait).

In contrast to China, India has only those two things: 1) a real Baby Boomer class, and; 2) a functional diaspora (did you look it up?). Nothing else about India works at all — nothing. India is corrupt and divided. While India has a commercial tradition it isn’t an especially functional one. Fractionalism and factionalism, whether economic, social, or religious, will keep India from ever truly pulling together. But that doesn’t matter because my two original points are enough.

{ Robert X. Cringely | Continue reading }

map { Delhi (Modern City), 1914 | enlarge | more }

Casino-resort developer Steve Wynn is betting big on the art market this fall. Mr. Wynn has enlisted Christie’s to auction off a Roy Lichtenstein painting for at least $40 million at its major sale of contemporary art on Nov. 10 in New York.

The 1964 painting, “Ohhh…Alright…,” depicts a pixilated redheaded woman clutching a telephone. (…) Mr. Wynn bought the work from a New York gallery, Acquavella, a few years ago. Before that, the painting belonged to actor and writer Steve Martin. Mr. Martin confirmed he once owned the work; Mr. Wynn declined to comment.

“Ohh…Alright…” has never been auctioned off before, but it has been shown to collectors on the private marketplace, dealers say. Most notably, it was included in a not-for-sale show of the artist’s “Girls” series two years ago at New York’s Gagosian Gallery. (…)

At the market’s peak two years ago, Christie’s privately brokered the sale of another 1964 Lichtenstein redhead, “Happy Tears,” for roughly $35 million, up from the $7.1 million the auction house got for that same work six years earlier, according to Brett Gorvy, Christie’s international co-head of postwar and contemporary art.

{ Wall Street Journal | Continue reading }

No one except Wynn himself might have imagined it, but in the past two years, the Las Vegas resort mogul has become one of the world’s most successful art dealers/warehousers. Looking at the fruit of one large purchase Wynn made in March 1998 (just one of many acquisitions he or his company has made), he appears to be looking at a potential 40 percent to 50 percent appreciation on an investment of $50 million.

Beginning in November 1996, Mirage Resorts President and CEO Steve Wynn began collecting art for the opening of Bellagio, an upscale resort in Las Vegas. Yet even before Bellagio and the Bellagio Gallery of Fine Art opened in October 1998, Wynn had become an art dealer, trading the works he acquired.

While Wynn picked out art for his company to purchase, he also bought for himself. Most notable is a group of seven contemporary paintings for $50 million from New York dealer William Acquavella on March 9, 1998. The math (admittedly, somewhat speculative), shows that Wynn has sold three of the paintings for around $37 million and two others worth about $4 million for undisclosed prices. And he still owns two that are worth over a total of $20 million, easily. Here’s a list of the paintings in question and, where possible, information on what has become of them.

Robert Rauschenberg, Small Red Painting, 1954
Combine painting, ca. 28 x 21 x 5 in.
Wynn ‘98 valuation: $3.4 million
Sold after Bellagio opened
Buyer and sale price are unknown

Cy Twombly, Untitled, 1961
Acrylic, colored crayons and graphite on canvas, 40 x 58 in.
Wynn ‘98 valuation: $847,458
Sold before Bellagio opened
Buyer and price are unknown

Franz Kline, August Day, 1957
Oil on canvas, 92 x 78 in.
Wynn ‘98 valuation: $2.5 million
Sold to PaceWildenstein, where it was for sale at $4 million
Presumed net to Wynn: around $3.2 million

Roy Lichtenstein, Torpedo…Los!, 1963
Oil on canvas, 68 x 80 in.
Wynn ‘98 valuation: $12.7 million
Sold spring ‘98 for around $14 million to Microsoft architect guru Charles Simonyi

Jasper Johns, Highway, 1959
Encaustic and collage on canvas, ca. 34 x 27 in.
Wynn ‘98 valuation: $9.3 million
Sold summer ‘99 for around $20 million

Willem de Kooning, Police Gazette, 1955
Mixed media on canvas, ca. 43 x 40 in.
Wynn ‘98 valuation: $11.9 million
Remains in Wynn’s collection

Jackson Pollock, Frieze, 1953-55
Oil, enamel and aluminum paint on canvas, ca. 26 x 86 in.
Wynn ‘98 valuation: $9.3 million
Remains in Wynn’s collection

{ ArtNet | Continue reading }

bonus:

videos { Wynn Las Vegas TV Commercial, 2005 | Encore Las Vegas TV Commercial, 2008 }