He was right.

Bardacke, a respected labor activist and educator based in Watsonville California, was first mentioned in this blog six years ago in connection with his research on Cesar Chavez. Like Bill Gates and Mark Zuckerberg, he dropped out of Harvard after his freshman year and moved west to change the world. Unlike them, he joined the Berkeley Free Speech Movement and has had an abiding interest in radical politics ever since. In the early 70s, I traveled to China with Bardacke to get a first hand look at Mao’s proletarian dictatorship. Frank admired all things proletarian; I feared the dictators. Bardacke often views the world through a different template than I do, but I have learned a lot from him and continue to have enormous respect for his views.

Bardacke became a farmworker – one of a handful of Anglos and surely the only former Harvard student to work the celery fields. He became fluent in Spanish and formed friendships with many of the union staff and farmworkers who appear in his book. He spent more than a decade interviewing every major participant in the drama, reading every known book on the farmworkers and scouring every archive. He received help in managing this massive project from faculty in history and politics at nearby UC Santa Cruz.

The result, Trampling Out the Vintage: Cesar Chavez and the Two Souls of the United Farmworkers, is the most complete account yet of the rise and fall of the UFW. It is also an epic, Shakespearean drama with all of the elements of a Hollywood blockbuster. The pitch meeting would be surreal:

OK, picture this: we have a conservative Catholic who fasts and marches like he’s Ghandi. He courts progressive clerics and hires liberal Jews and alienated Anglos to mobilize immigrant Mexicans and Philipinos to fight Slavic and Italian growers. At first David slays Goliath, but then he morphs into King Lear and destroys his newly built kingdom amidst slaughter and recrimination. We’ve got side plot romances between devotees who work for $5/week and bad food trying to raise farmworker pay. We’ve got violent Teamster, UFW, and grower thugs straight out of the Sopranos. We’ve got a certifiably batshit human potential guru who wreaks havoc getting everyone to criticize everyone else. And under the carpet here somewhere, we may even have communists trying to advance a proletarian revolution without a proletariat. How can we miss?”

Astonishingly, it is a true story and Bardacke delivers it with intelligence and compassion. Unique among labor historians, he grounds his analysis in “the work itself”, with brilliant, memorable descriptions of how different stages of production for different crops in different regions of California all affect the ability and willingness of different crews to self organize. He describes clearly why organizing was often sustained by the tight-knit, highly skilled lechugeuros or the celery cutters, not the garlic or asparagus workers or those in ladder crops. He describes the skill and endurance that the work requires, introduces leaders that arise from various crews, and captures in fine detail how they interact with a union that was built on a very different set of principles from farm work. In a decade spent organizing waiters, housekeepers, nurses, bartenders, machinists, cannery workers, and assembly workers, I observed precisely these differences. The work itself shapes our propensity to organize. Bardacke is the first writer to apply this principle to the fields and he does so with a deep understanding and compassion for the work.

Bringing an existing union into a workplace is an act of industrial combat not for the faint of heart — but starting a new union from scratch is a herculean task that almost always fails.  I started a company that has lasted more than a decade, a public agency that lasted three years, and a union (United Espresso Workers – I was a bit early) that lasted all of three weeks. With the proud exception of the United Farmworkers, I cannot think of a single independent union formed in the United States in the past 50 years that was not sponsored and controlled by an incumbent union (I can think of several that tried and died – but none who made it).

This was not always true — new unions once spawned regularly in the US. There are many reasons for the change, but the lack of competition between unions has positioned them nicely for extinction. Organizations evolve through the mutation, variation, and selection that is always produced by competition. The labor movement stopped growing the instant the AFL joined with the CIO and prohibited unions from competing with each other. When two teachers unions competed, both grew. The instant the Teamsters stopped raiding the UFW, growth stopped. I hated the Teamsters (who were kicked out of the AFL-CIO for corruption and are not subject to the noncompete provisions) and I took a nasty beating from them once, but like sharks or wolves, they have their place in the ecosystem. (I am aware of no union leader who agrees with this view, by the way. Most feel that they have all the competition they can handle from employers).

But for a brief moment following the civil rights movement in the 1960s, a new labor union arose in the United States and in the least likely place. If you had asked in 1960 where in the economy a new union might appear, you would never have selected the farmworkers of California. Organizers prefer workers who are tied to one place and to one employer, not workers who are seasonal and often itinerant. Probably wrongly, organizers prefer workers who are covered by labor laws, which had always exempted farmworkers. Organizers like English-speaking Americans, not Tagalog or Spanish-speaking immigrants or Braceros who are tolerated for a season then ushered back to Mexico. A dozen or so failed efforts by farmworkers to form agricultural unions seemed to validate Marx and Lenin’s belief that workers would organize once they were forced into factories and worked for a single employer.

Bardacke demonstrates that Cesar Chavez succeeded in organizing farmworkers because he was, at heart, a brilliant and hard-working Alinksy-trained community organizer. As a community organizer, Chavez pioneered an enormous innovation that had the potential to transform labor organizing: he mastered the secondary boycott (illegal for most workers under the federal labor law, which thoughtfully excludes farmworkers). Chavez tirelessly organized enormous boycott operations in grapes, lettuce, and against major retailers including Safeway.

Farmworker boycotts were the Occupy movement of the 70s and 80s – a way for college students, community activists, and middle class young people to participate directly in the tough work of social change. And credit Chavez’s brilliant leadership, it worked magnificently: faced with effective boycotts, growers raised wages and improved working conditions and politicians begged the army of grass-roots Chavistas to help register voters and turn them out on election day. The UFW became a powerful force for social change.

But the UFW was only briefly a powerful labor union. Bardacke correctly diagnoses the boycott as creating a formidable tension within the UFW. He frames the tension between labor and boycott organizing as a struggle between the “two souls” of the UFW. The metaphor is fraught. As Bardacke demonstrates, the UFW collapses not because it has two souls, but because none of its activities were organized, financed, or led in a manner that enable them to grow. The problem is not that community organizing is a distraction – most American labor unions lack a community service organization and are much the weaker for it. This is tragic: having discovered and refined one of the few recent innovations in union organizing, Chavez cannot let it grow. Instead, he strangles his own child.

One of the heros of Bardacke’s book is Marshall Ganz, one of America’s most innovative labor organizers. Ganz also dropped out of Harvard, but moved south to organize for civil rights before heading west. After his exile from the UFW, Ganz helped the Silicon Valley Central Labor Council build a powerful neighborhood-based political organization for the 1984 elections. He was terrific at posing fundamental questions – and at directing me and others to writers and thinkers who helped answer them. In 1984 he urged me to read, of all things, a business book, In Search of Excellence. I quickly developed an appetite for business writing. decided to get trained in it, and ended up working with the book’s authors. Marshall returned to Harvard, got his degree after a 28 year hiatus, and now teaches at the Kennedy School. (His version of the UFW story, told in Why David Sometimes Wins, is a fine companion volume. It suffers for being his PhD dissertation and dwells more deeply on theories of organizing and less on the dynamics of local struggles).

So let’s ask a Marshall Ganz-like question: what does it take for an organization to grow successfully? Venture capitalists, a group not deeply concerned with the welfare of those who produce their salads, obsess about this question. There are at least as many answers as there are VCs, but common elements include:

• A big market. If there is not substantial demand for the product or service an organization produces, the organization cannot get very big.

• Positive unit economics. If serving one more person imposes more cost on the organization than it generates in revenue, then growth makes no economic sense and the organization will depend for growth on funding from charity or government. Anyone can sell a dime for a nickel; selling a nickel for a dime means that an organization has to add at least a nickel’s worth of value if it wants to grow.

• Customer or member acquisition costs that scale. Every organization has a cost of acquiring a customer that must be repaid over the lifetime of that customer or member. Smart organizations exhibit declining COA: the cost of acquiring each incremental customer declines with scale. Very smart organizations (and effective social movements) are viral: COA approaches zero as current participants recruit new ones. See Facebook, Google, or Arab Spring.

• Leadership. Growth is very, very demanding on an organization. Everyone in a fast-growing organization has to grow with it: jobs change radically every few months. Not everyone grows at the same pace, so leaders must recruit furiously, communicate direction and values continually, promote and replace people regularly, and test what works all the time. It is stressful and a lot of fun – ask anyone who has been involved in a fast-growing company, boycott, strike, or organizing campaign.

Back to the fields. Boycotts have completely different economics than labor organizations. Boycotts have huge markets: liberals eager to shop their conscience. Churches and colleges do the recruiting at very low cost to the boycott sponsors. Every convert adds more value (the grapes they don’t buy) than cost (the very low cost of volunteers leafleting).

Unions are different. The market for a membership organization of farmworkers is not small, but it is small enough that the UFW needed to capture almost all of it because, as Bardacke notes, organizing half an industry penalizes the organized growers. A union has a responsibility to organize the remaining growers and will frequently be cheered on quietly by those who have signed. More fundamentally, unions need to grow big enough to achieve minimum economic scale: they cannot fund the fixed cost of their operations if they are too small. Unions with fewer than a half a million members are nearly always too small to operate efficiently across the US (meaning that most unions in the United States waste money because they are too small). The UFW never had 100,000 members — although its field operations were mostly in California. Bardacke would counter that the democratic character of the union matters more than its size, which is true, but creating organizations that are not economically sustainable is a bad idea. Unions do this all the time.

Unions have a second problem, to which Chavez developed a unique but ultimately unworkable solution: the economics of labor organizing are often unattractive. Campaigns, negotiations, and strikes are expensive and uncertain of success. If unions file for elections on half of the campaigns they run, win half of the elections they file on, and negotiate contracts successfully 80 percent of the time, then every successful contract has to finance four unsuccessful campaigns and potentially a strike. If the campaigns and the negotiations are labor intensive and the union bears all of those costs, then the economics of organizing turn heavily on the cost and productivity of staff and on the cost and duration of strikes.

The Chavez solution to this dilemma was simple but utterly unsustainable: pump talented people through the organization. Those of us who worked boycott operations worked 14-16 hour days, often 7 days a week. We were paid $5/week and had to beg for donated food to eat. Once we were burned out, the UFW happily replaced us in a process Chavez once compared with pumping water. At any given time during large boycots, hundreds of young people slaved on the campaigns for months and sometimes years. Staff at headquarters (located in the small misnamed town of La Paz), were likewise furnished with living quarters, food, and a miniscule stipend. Chavez personally approved all expenses. From here, it looks like a cult – although from inside the cult, it looked like La Causa and stands today as some of the best work many of us ever did. Regardless of how it feels or looks however, and regardless of the ethics of exploiting volunteers on behalf of underpaid farmworkers, an organization without a core of talented, motivated leaders simply does not scale. Volunteers are not enough — and finding people like Marshall Ganz and Eliseo Medina to fight year after year for farmworkers without paying them even farmworker wages is simply unrealistic.

Bardacke does not go deeply into union economics in part because there is a much bigger tension restricting growth: a command and control organization. Chavez not only micromanages, but much worse, he prohibits local labor or boycott operations. Centrally led boycott operations could work: boycotts demand a consistent message and negotiations with a single adversary and since allied organizations delivered most of the volunteers with help from a skeletal UFW staff, there were relatively few local issues to resolve. But labor organizations are built in hundreds of unique workplaces. This is in part due to the work itself: the problems of lechugueros are simply not the same as tomato workers or lemon pickers. More important however, is that without elected reps, stewards, and ranch committee members, contract negotiations suffer because strike threats lose credibility. Without a credible strike threat, backed in this case by a credible boycott threat, growers rationally refuse to negotiate. Chavez tried to run the union from the top, like he built and ran the boycott. When George Meany and others derided the UFW as “not a real union”, they were wrong at the level of the fields. But in their description of La Paz, they were right.

Bardacke reveals Cesar Chavez to be a brilliant community organizer who campaigned for farmworkers but did not empower them. Bardacke plots the tragic trajectory of the UFW from an authentic movement led by a charismatic leader to one paralyzed by demoralized staff that could see no way to grow a union beyond the constraints imposed by its increasingly unstable founder. Chavez died afraid of his own organization, which he had shriveled into a family business devoted to nonprofit services, La Raza not La Causa, and promoting the Chavez legacy. The union was all but gone.

Bardacke masters an enormous amount of material to relate these events skillfully. He salts his prose with stories and characters straight out of Steinbeck. He rarely leaves the reader guessing about his point of view: Walter Reuther, the brilliant activist who built the United Auto Workers (and marched with Cesar in Delano) is a worthless hack because he voted against seating the Mississippi Freedom Delegation in 1964 and drove communists from the union. Those who cross the US border illegally are noble immigrants deserving of union embrace; those who cross picket lines legally are scabs deserving of UFW tire-slashing and intimidation (but not of UFW efforts to call La Migra and send the illegals among them home). Teamster and grower goons are thugs; Manual Chavez, designated hitter for his nonviolent cousin and other UFW punks are charming rogues who firebomb field sheds and beat their opponents. Those who seek to impose Synanon’s destructive ideology on the UFW are obviously crazy and should be driven from the union; those who seek to advance various communist or nationalist ideologies within the organization are dedicated activists who should be protected. Trampling Out the Vintage is a beautiful work despite these caricatures; it would be even stronger without them. It is a book that deserves a wider distribution and better copy editing than Verso, a niche left publisher, can provide. It would also be nice had Verso published the book electronically (then again, Frank confesses in the postscript that he composed the early chapters of the book on a typewriter!)

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George Whitman, 1913-2011

I have known hundreds of booksellers; the most memorable by far was George Whitman, proprietor of Shakespeare and Company, across from Notre Dame at point zero in Paris.

His store, like its namesake run by Sylvia Beach during the 1930s, became point zero for two generations of writers and wanderers. I am one of tens of thousands of people who was taken in by George, absorbed into his literary world, made part of his little “Rag and Bone shop of the heart”. George never cared about money, food, or finery — he cared about people, literature, and travelers. He was especially drawn to young people, to whom his generosity was legendary.

I last saw George four years ago. My tribute to him at the time reads nicely today. I recalled my days living in Shakespeare in January of 1976, decades after Jackie Onassis had come through as a student and around the time that a young Greek immigrant named George Soros hung his hat at Shakespeare & Co. for several days.

The New York Times ran a wonderful obituary about George, who had written his own eulogy years earlier. Inscribed over a doorway that led to the upstairs of Shakespeare was a motto: “Be not inhospitable to strangers,” it counseled, “for they may be angels in disguise”. George did not, in fact, treat every visitor like an angel in disguise. But he gave visitors a place to discover their literary angels, and more than a few rose to the challenge.

Christopher Hitchens, 1949-2011

A life that partakes even a little of friendship, love, irony, humor, parenthood, literature, and music, and the chance to take part in battles for the liberation of others cannot be called ‘meaningless’ except if the person living it is also an existentialist and elects to call it so.”

and

Beware the irrational, however seductive. Shun the ‘transcendent’ and all who invite you to subordinate or annihilate yourself. Distrust compassion; prefer dignity for yourself and others. Don’t be afraid to be thought arrogant or selfish. Picture all experts as if they were mammals. Never be a spectator of unfairness or stupidity. Seek out argument and disputation for their own sake; the grave will supply plenty of time for silence. Suspect your own motives, and all excuses. Do not live for others any more than you would expect others to live for you.”

Hitchens was always provocative, occasionally irritating, and frequently funny. I will miss his voice enormously.

Vaclav Havel, 1936-2011

Imagine a political upheaval so profound as to be accurately called a revolution, so bloodless and smooth as to be called velvet, and so artistic that its leader was a playwright who conducted the insurrection from, and I am not making this up, the Magic Lantern Theatre, in Prague. Vaclav Havel is the Nelson Mandela of Eastern Europe, and his personal role as catalyst of the communist collapse his hard to overstate. From the Times:

In 1977, Havel was one of three leading organizers of Charter 77, a group of 242 artists and activists who called for basic human rights in Czechoslovakia. Havel was arrested and imprisoned. He spent five years in and out of Communist prisons, lived for decades under daily police surveillance and suffered the suppression of his literary works.

Later he served 14 years as president, resigning rather than see his country separated. He is author of  19 plays and dozens of essays, including “The Power of the Powerless”, which influenced a generation of activists much as King’s “Letter from a Birmingham Jail” had done in the United States. By the time he became President of Czechoslovakia, Havel had written more serious fiction than most heads of state had read.

Timothy Garten Ash, then a British graduate student, witnessed the remarkable Havel in action during the Velvet Revolution. Havel’s moral standing, his poetic use of language, and his patience made him as the dominant figure in resistance politics in Prague in 1989. Garten Ash reports in his indispensable first hand account of events that year in Prague, Budapest, and Berlin that Havel served as the chief behind-the-scenes negotiator who brought about the end of more than 40 years of Communist rule and the peaceful transfer of power. The revolt was so smooth that it took just weeks to complete and not a single shot was fired.

Warren Hellman 1934-2011

In business school, I became friends with Marco, the kid in the next seat everyone called Mick. I recall the day when a classmate told me “his father is Hurricane Hellman — the youngest partner in the history of Lehman Brothers. He ran the place before he turned 40″. Although I only met Warren Hellman a handful of times, I came to respect him as an icon of a group of prominent postwar Bay Area business Republicans who were deeply civic, secular Jews whose contribution to life in these parts is rarely noted. Architect Art Gensler and Gap Founder Don Fischer are others, as, excepting the Republican bit, are banker Bill Hambrecht and Levis heir Robert Haas.

If you live in the Bay Area, it is hard to overstate the impact of Warren Hellman. He saved San Francisco over a billion dollars by financing a ballot measure to reform the city’s tottering pension system. He built the parking garage beneath teh DeYoung Museum in Golden Gate Park. He chaired the Board of Trustees at Mills College and reversed the decision to admit men (still a very popular decision, although I have argued a dubious one). He funded the San Francisco Free Clinic and endowed aquatic sports at UC Berkeley, where he had played water polo as a student. And in 2001, Hellman launched the Hardly Strictly Bluegrass festival, an annual three day event in Golden Gate park that draws more than 300,000 people and is put on for free. Hellman paid the musicians, usually including EmmyLou Harris and the late Hazel Dickens. Hellman himself was a serious amateur banjo player and toured with his group, the Wronglers, until quite recently.

Hellman was not only born into a remarkable family, but he created one as well. He was the great grandson of Isaias Hellman, California’s first banker, who created what became Wells Fargo Bank and built the University of Southern California. His kids are high achievers who share his passion for athletics. Warren competed in extreme sports, once finishing a 100-mile high altitude race in the Sierra after falling and breaking a rib at mile 25. His kids have won championships in m mountain bike racing, skiing, and other sports.

Hellman was the sort of one percenter that the Bay Area loves: a guy who took much more pleasure from giving his money away than he did from making it; who walked away from Wall Street to build an investment firm as “the opposite of Lehman Brothers”, who rarely wore a tie and never seemed to take himself terribly seriously, and who was disarmingly candid about his many failures. He has much to teach the pashas of Silicon Valley; I sincerely hope that they are up to the task.

Kim Jong Il, ??-2011

Those looking for evidence that God has a sense of humor had a fine week. Not only did the Iraq war and the life of Christopher Hitchens end on the same day, but the loss of four of our finest was followed by the unmourned death of perhaps the worst human alive.

History will struggle to find a single kind word to say about Kim Jong Il. He built a hermetic garrison state, imprisoned and starved millions of his people, sponsored untold terrorist activities including the downing of a civilian airliner, and undertook military provocations and kidnappings against Japan and South Korea. He developed and tested thermonuclear weapons and sold them to some of the most unstable governments in the world, including Pakistan. He refined his doctrine of Juchu into a personality cult that represents the precise opposite of everything George Whitman, Christopher Hitchens, Vaclav Havel, or Warren Hellman stood for. 

As Shakespeare predicted, the evil that Kim did will survive him. Kim’s sudden death is problem for South Korea but an even larger problem for China. China has tended to treat North Korea as their pain-in-the-ass psychotic kid brother who refuses his meds but performs a useful service by keeping the neighbors on their guard. But an unstable North Korea is not a good thing for China. There is a strong argument that China will need to take over North Korea as a client state — effectively a new province. In a generation or two, Korea would either unify in a Chinese economic sphere or the North would be forcibly absorbed, Tibet-like, into Han culture. It ain’t Jeffersonian democracy, but it is hard to argue that this would be a worse outcome for the people of North Korea than the continued demented rule of the last standing communist dynasty.

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The United States maintains posh embassies around the world to host worthies from events such as these and our current ambassador to Hungary did not disappoint. Obama’s emissary is Eleni Tsakopoulous Kounalakis, Berkeley grad but Stanford donor, daughter of a real estate tycoon and a California-based Democratic activist of the Phil Angelides school of progressive realtors. She raised more than a million bucks for Hillary, which made her ambassador material. Budapest isn’t bad duty (one can imagine her politely passing on an opportunity to serve in Athens, the family homeland).

She was a fine hostess and thoughtfully included entrepreneurs from interesting Hungarian startups including Prezi, UStream, Logmein, and NNG (formerly iGo). But the highlight of the reception and dinner hosted at the embassy came when Koualakis tapped my shoulder to introduce a short, shy, graying fellow “I’d like you to meet Erno Rubik”. I fought back the urge to bow, shook his hand, and realized that he, like many others in the room, would rather be working.

Rubik is, of course, the inventor of the world’s most popular toy — the maddening twistable puzzle instantly understood by any child and rarely solved even by accomplished adults. It has spawned an industry of competitions, including speed-cubing, foot cubing (current world record for solving a Rubik’s cube using only your feet is a bit over a minute), and blindfold cubing (look at the scrambled cube, get blindfolded, and work from memory. Good luck with that.)

We were all challenged to complete a scrambled cube (yeah, I know. There is an app for that. You photograph the cube and it shows you how to solve it. Erno even earns royalties on every download. But for once, I resisted). Personally, I always thought that the real innovation behind the cube was the weird bit of plastic in the middle that can be twisted every which way without breaking. And yes, I have taken a cube apart to see it, although I admit that there was a hammer involved. (If you want to try it, just twist the top 45 degrees and you can pop the thing apart pretty easily. Of course, you can reassemble it solved — that’s how many people do it).

Naturally neither America’s top scientists nor Hungary’s top entrepreneurs, people who solve three dimensional problems in their sleep, could restore a scrambled cube, which got me to wondering: which came first, the mathematics of the cube, or the puzzle itself? Surely a brilliant Hungarian mathematician like Rubik had computed the various solutions to a cube. Perhaps he had even tried to solve the “God number” question: what is the fewest number of moves that will restore any cube? The God number turns out to be 20 for a 3*3 cube, and a lot of mathematics together with 35 years of Google-donated CPU time went into figuring that out. Turns out however, that Rubik is an architect and game designer, not a mathematician.

There are of course, people who make solving Rubik’s cubes look incredibly easy. For example, the world’s record for solving a cube is….you won’t believe it. So watch — but don’t blink or you’ll miss it.

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Steve Jobs died

I felt like someone had unplugged my compass. Steve Jobs was by any reasonable measure the greatest entrepreneur and the greatest CEO in American history. He was a hero to his customers, but to most technology entrepreneurs, he was a God. He revered the Beatles and always reminded me of John Lennon: a genius with round glasses, a rebel with a mischievous grin, and an artist who showed the world things that it had not realized it wanted. With both, it takes years to absorb the full loss.  

Steve Jobs had the soul of an an artist. Like Leonardo DaVinci, Samuel B. Morse, or Edwin Land, he lived at the intersection of humanities and technology and could ruthlessly carve away marble until only his vision of beauty remained. He was a practical poet who understood that “real artists ship”. He accomplished his goal of “making a dent in the universe” — but his premature death has left a dent in the hearts of people the world over.

Steve was the rarest of creatures: a business revolutionary motivated by a deep love of technology and its power to change the rules. We always knew that his “Think Different” ad was really about him:

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

Steve broke rules eagerly. He dropped out of college and dropped acid. He fathered a daughter and disclaimed her, much as his Syrian biological father had lost track of him. He followed very odd diets and lived on communes. At age 20, he made a sojourn to India to see a guru. He learned to focus and focus some more. Often, this meant removing features. The original Mac had no cursor keys. Steve was the first to take away keyboards, mice, modems, floppies, Flash, screens, and CD-ROMs. Reviewers raged and the digerati derided him, but Steve knew that “innovation means saying no to a thousand things”.

His passion often made him obnoxious. Seated next to him on a flight in 1979, he learned that I had made my Apple II usable for word processing by inserting a Z-80 card so that I could run WordStar under the CP/M operating system. He was appalled: “Why on earth would you ever do that?” he asked twice, shaking his long hair and making it very clear that I had flunked the bozo test. He publicly insulted competitors and employees. He launched huge products, including the iPad, with no market research (“it is not the consumer’s job to know what they want”.) At a dinner in 2006, he repeatedly assured me and others that Apple would never sell a telephone under any circumstances. Nobody believed him for a moment (six months later, he unveiled the iPhone), but any other CEO would have deflected the rumor instead of lying outright. This sort of behavior famously got him fired from his own company.

I harped constantly in this blog and elsewhere on his insistence that he control every aspect of the user experience. I recall construction workers building Pixar across the street from my company shaking their heads in awe every time Jobs would land on the property in his baby blue helicopter and take a pencil to their blueprints. He spent millions moving walls and even foundations at the last minute so they would end up precisely where he thought they should go.  He obsessed about details that few CEOs notice (when you upgrade your iPhone next week, notice that as you bring the message shade to a full close, a very tiny animation rounds off the squared edges. Nobody but Steve Jobs would bother to do that.)

Steve Jobs failed. A lot. The Apple III was a disaster. The Lisa sold so poorly that tens of thousands of computers named after his daughter ended up in a large land fill in Utah. You have hardly heard of the Pippin, the Newton, the Copeland, HiFi, the G4 cube, Mobile Me, and several other products that were complete busts. It didn’t matter. Jobs remained unbelievably self-assured and ridiculously demanding. Over the years, I met several Apple employees who worked insane hours and suffered nervous insomnia because they had to present a product or an idea to Jobs – and were terrified at the prospect. One such encounter, possibly apocryphal, was reported in The Atlantic.

When engineers working on the very first iPod completed the prototype, they presented their work to Steve Jobs for his approval. Jobs played with the device, scrutinized it, weighed it in his hands, and promptly rejected it. It was too big.

The engineers explained that they had to reinvent inventing to create the iPod, and that it was simply impossible to make it any smaller. Jobs was quiet for a moment. Finally he stood, walked over to an aquarium, and dropped the iPod in the tank. After it touched bottom, bubbles floated to the top.

“Those are air bubbles,” he snapped. “That means there’s space in there. Make it smaller.”

As I drove north towards San Francisco following the news of Steve’s death, the radio reported that mourners were gathering at Apple headquarters, at Apple stores, at Jobs’ house, and in Dolores Park. Tributes followed from around the world – many of them written and read on devices that Steve built. Here are some that resonated:

7. Of the statements by the famous, Obama called Jobs “…brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it.” He shoulda said “think different”, but otherwise a good statement.

Bill Gates was quick and generous: “For those of us lucky enough to get to work with him, it’s been an insanely great honor. I will miss Steve immensely.” Gates ordered the flags at Microsoft lowered to half-mast. Microsoft joined Amazon, eBay, Google, and many other other sites in offering home page tributes.

6. Insanely Great  author Steven Levy wrote a colorful, articulate obit for Wired that is exceptionally well done. Sample: “If Jobs were not so talented, if he were not so visionary, if he were not so canny in determining where others had failed in producing great products and what was necessary to succeed, his pushiness and imperiousness would have made him a figure of mockery.”

5. John Markoff, the talented New York Times technology writer who has known Jobs for many years wrote a precise, careful, definitive obituary. That, of course, is why we have the New York Times.

4. Fake Steve Jobs, captures the Jobsian hauteur and poetry with surprising and touching verse. An excerpt:

3. Apple. Immediately revised its home page, as did Pixar. Very Steve. He probably approved it in advance, but still. I hope they keep up the tributes and his spirit.

2. The Onion: “The Last American Who Knew What the Fuck He Was Doing Dies”. “We haven’t just lost a great innovator, leader, and businessman, we’ve literally lost the only person in this country who actually had his shit together and knew what the hell was going on…” My kind of tribute. Not for everyone. But anything that makes me laugh at tragedy is +1 in my book.

1. Steve at Stanford. The YouTube video was watched 8 million times yesterday, as crowds paid tribute at Apple stores around the world. NPR played the speech in full at noon. It’s a classic believed by many to be the best commencement address ever given. Even if this is not such a high bar, it’s a great talk and worth watching again.

Many are memorializing Jobs as this generation’s Henry Ford because he did for computers what Ford did for cars — transform them from hobbyist toys to indispensable commodities. In his day, Ford was hugely popular — tens of thousands attended his memorial services in 1947. Some have declared Jobs a modern Thomas Edison, the great inventor who was buried by a small group of friends in rural Ohio (a group that included, ironically, Henry Ford).

Others compare him to Walt Disney, a technology and artistic visionary whose ashes are in Glendale (he is not cryogenically frozen, as widely believed) and whose largest shareholder ended up being Steve Jobs (Jobs made about twice as much money selling Pixar to Disney as he did selling Apple to the public — although these things change with the stock market and there is no evidence that he cared much in any case).

By a very wide margin, Steve Jobs earned first place in the pantheon of genius entrepreneurs. He utterly transformed not one industry but five or six: personal computers, music, telephones, tablets, and animated film. And possibly publishing. He  personally led extraordinary business turnarounds at both Apple and Pixar. When he stepped down as CEO, Apple was the most valuable company in the world. 

Steve was a national treasure and we should honor him in a big way: schools, parks, battleships, postage stamps — the whole thing. I’d gladly throw Columbus under a bus to give Steve Jobs a national holiday. I hope his forthcoming biography is the smashing success that everyone expects it to be.

We will miss this guy enormously.

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With my wife grounded by a nasty ankle injury, we took in three movies and I escaped to a rock band reunion. Oddly, they all confirmed the same lesson: nostalgia is a temptress — fun, but wholly unreliable. 

Owen Wilson is the hero of Woody Allen’s new movie, Midnight in Paris. He is a Hollywood screenwriter working on a piece about a nostalgia dealer even as he visits Paris and is transported in style back to the Lost Generation of the 1920s and 30s. The film is complete with a hysterical Hemmingway, a brilliant Stein, and appearances by Dali, Picasso, and both Fitzgeralds. It is a romp – the sort of film that Allen made in the good old days before he married his step-daughter.

Allen understands that mature cities are built on memories — perhaps Paris most of all. Memory is impossible in emerging cities (in Beijing today, the drivers frequently get lost because entire neighborhoods are transformed so thoroughly that they seem foreign). Mature cities are often wealthy enough to be politically liberal but most are culturally conservative, even as they attract the great minds of every age. Inevitably, the Golden Age of any great city is thus built by people who idolize an earlier Golden Age. Into this vortex steps Wilson, a Texan version of the traditional Woody Allen romantic, neurotic schlurb. It all works well, with the obvious exception of Carla Bruni, who should stick to her day job as the first lady of France. (Unable to cut her from the film altogether, Allen simply created a new character, wonderfully played by Lea Seadoux, to take over 90% of the role offered to the hopelessly wooden Bruni). 

We also treated ourselves to a pair of movies I passed on when they first came out but have since been told by many constitute the best romance films ever made: Before Sunrise and Before Sunset. Both films consist almost entirely of conversation between Ethan Hawke and Julie Delpy. Once again, there are ties to Paris and nostalgia, and some of the ties are subtle. For example, the second film opens at Shakespeare and Company, the famous bookstore founded by Sylvia Plath and frequented by Hemmingway, Dos Passos, and other characters out of Midnight in Paris. Plath famously published James Joyce’s Ulysses, which takes place on a single day, June 16, Dublin. Before Sunrise takes place during a single day in Vienna and ends with our two lovers agreeing to reunite in Paris the following summer on, you guessed it, June 16. The second film opens with viewers wondering whether either had shown up. The movies are wonderfully rendered, brilliantly acted, and an ode to the trap of powerful memory, especially powerful romantic memories. Very highly recommended and available for streaming on Netflix.

On the advice of a friend, I caught the Buffalo Springfield reunion concert down the street at Oakland’s the newly restored Fox Theater. The theater is beautiful, but tells a powerful political tale. It was refurbished by Jerry Brown as mayor using redevelopment money, despite the Paramount, a landmark Art Deco theater one block away. The Paramount was empty the night of the Springfield reunion — and Jerry Brown is now proposing, quite rightly, to eliminate California’s wasteful, zero-sum, redevelopment spending.

The Springfield are nothing these days if not nostalgic. The concert opened with On The Way Home: “When the dream came, I held my breath with my eyes closed”, which pretty much described the graying, cannabis-mellow crowd.  

Buffalo Springfield reminded me of the new atomic elements reported in today’s Times. Like all of the heavy particles, it is highly unstable and blows apart after a split second. The three founders still seem deeply incompatible. Stephen Stills is a classic rocker and always has been. He looked pretty good, he has lost some weight, but he can no longer sing. Furay is a pop singer, good at the girl songs, who should have joined the Eagles. He can sing, but his guitar playing is like a guy leading church camp. Which figures, since Furay has been a Christian minister for the past three decades, but apparently needs another 15 minutes of rock star fame. 

Then there is Neil Young (who Stills once wrongly accused of being “a folk singer who wants to play in a rock band”). Young is just more talented, more committed, and all around more bad ass than Stills or Furay. Young played off to one side, but the stage always tipped his way. In the encore, he broke loose and lit up the place with Keep on Rocking in the Free World, which revealed Stills and Furay to be what they always were: Young’s backup band. The idea that these guys in their 20s and on drugs even practiced together, never mind made albums and toured, is hard to imagine. The reunion produced some memorable music, but ultimately no nostalgia can overcome the core incompatibility of the band’s founders, who stayed together less than two years. 

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Sometimes an artist captures lightning in a bottle. Usually they aren’t sure how it happened and few can repeat the magic regularly. In 1968, Van Morrison recorded Astral Weeks under awful circumstances. Today, it is widely recognized as a transcendant work, truly one of the greatest albums ever recorded.

It is an album that has made me think and feel alive for four decades. The story behind Astral Weeks is as remarkable as the album itself.

1967 ended badly for Van Morrison. He was 22, in New York, and broke despite the commercial success of “Gloria” (which Van wrote when he was 17) and “Brown Eyed Girl”. Creative differences with his label had led to a contract dispute with its founder Bert Berns.

On December 30, Berns died of a sudden heart attack and control of Bang Records passed to his vindictive wife. Illene banned Van Morrison from her studios, continued to block royalty payments, threatened any club tempted to offer him a gig, and tried to have him deported when she discovered that her husband had not filed all of Van’s immigration paperwork.

Morrison was desperate. He solved his visa problem by marrying his American girlfriend. They fled to Cambridge, Massachusetts, where Van went acoustic. One night Lewis Merenstein, a Warner Brothers executive, heard him play a song called Astral Weeks. “I started crying. It just vibrated in my soul, and I knew that I wanted to work with that sound” Merenstein reported years later.

Warner Brothers set to work figuring out how to resolve Morrison’s byzantine contractual problems (one part of the resolution required Van to record 3 songs each month for three years for Bang.  He did all 36 songs in an afternoon. They were original, discordant nonsense – nobody said the songs had to be good).

In a brilliant move, Merenstein decided to back Van Morrison with jazz musicians. He contacted Richard Davis, who may have appeared on more jazz albums than any other bassist. They found a guitarist, percussionist, and drummer who were all experienced session musicians with strong jazz backgrounds.

THE ALBUM

Jazz musicians collaborate — but Van Morrison didn’t do collaboration. He told the studio musicians to “follow him and stay out of the way”. There were no preparation meetings, no discussions, and no lead sheets – the basic thematics of a song that give musicians something to improvise from. The musicians ended up appreciating the artistic freedom, even though Van, who recorded from his own booth and never spoke to them, seemed shy to the point of being anti-social.

They recorded in three sessions in September and October of 1968. Years later, Van recalled the times

“You have to understand something,…A lot of this … there was no choice. I was totally broke. So I didn’t have time to sit around pondering or thinking all this through. It was just done on a basic pure survival level. I did what I had to do.”

Warner issued Astral Weeks in November, 1968. They did not promote it heavily and the album was a commercial failure. One prominent industry review compared Morrison to Jose Feliciano. According to Merenstein

“(Warner Brothers) just didn’t know what to do with it so they did nothing. They were expecting ‘Brown Eyed Girl’, and the first thing I played them was a seven-minute song about rebirth with no electric guitars and an acoustic bass. They just shook their heads.”

Astral Weeks never even reached the Billboard 200. But it got an extraordinary review by Lester Bangs in 1979 and when Rolling Stone reviewed the album for a second time in 1987, it was to declare Astral Weeks a masterpiece. They declared that the album

“sounded like nothing else in the pop-music world of 1968: soft, reflective, hypnotic, haunted by the ghosts of old blues singers and ancient Celts and performed by a group of extraordinary jazz musicians, it sounds like the work of a singer and songwriter who is, as Morrison sings in the title track, ‘nothing but a stranger in this world.’”

The album sold slowly but acquired a following. It took 35 years to sell its millionth copy and “go gold”.  Many Van Morrison fans don’t know the album and many who know Astral Weeks are not fans of the Van Morrison famous for “Moondance”, “Domino”, and “Wild Night”. More than any album I know, Astral Weeks profoundly affects people. I discovered it in the seventies when I was about the age Van Morrison was when he wrote the music. Producer Lewis Merenstein said in 2009, “To this day it gives me pain to hear it. Pain is the wrong word—I’m so moved by it.”

Astral Weeks has been compared to an impressionist painting – it evokes without directly portraying. It’s a poetic, even mystical album with syncopated rhythms, frenzied and painful vocals, and lyrics that evoke images instead of ideas or stories. It is, in many respects, vocal jazz without the customary extended solos and improv. Some find loose or hidden narratives in the music, which Morrison describes as largely stream of consciousness fit to a melody.

Morrison wrote all of the songs on Astral Weeks in 1966-67, when he was 21 or 22 years old. He told the LA Times that Astral Weeks is “poetry and mythical musings channeled from my imagination.” And quite an imagination it was:

• Astral Weeks the brilliant opener, described by Morrison “one of those songs where you can see the light at the end of the tunnel.” The Warner guys were right — this ain’t “Brown-Eyed Girl”.
• Beside You in contrast, is “..basically a love song. It’s just a song about being spiritually beside somebody.”
• Sweet Thing is a popular, circular lyric about nature and romance, described by one critic as “seemingly beginning in the middle of a thought: ‘And I will stroll the merry way.’”
• Cyprus Avenue refers to a street in Belfast described by a local as “where all the expensive houses and all the good-looking totty came from…mostly upper-crusty totty…There’s a couple of big girls’ grammar schools up ’round that direction.” Song is over the top with longing and harpsichords.
• The Way Young Lovers Do is described by Clinton Heylin as a “lounge-jazz” sound that “still sticks out like Spumante at a champagne buffet.” Maybe the only track that would get a B.
• Madame George was originally titled “Madame Joy” and Morrison actually sings the words “Madame Joy” in the song. A swirling, compassionate song about a transvestite (or about George Ivan Morrison?). One of the most emotionally and musically nuanced pop songs ever recorded.
• Morrison wrote Ballerina a powerful tale of yearning, in 1966 about the same time he first met his future wife, Janet. A tale of longing that makes people cry.
• Slim Slow Slider is a tragic song about watching a young girl die. The songs ends abruptly with the words, “Every time I see you, I just don’t know what to do.” It has been said to be about a junkie but Morrison only has said that it’s about someone “who is caught up in a big city like London or maybe is on dope, I’m not sure.”

CRITICS

The album caught the attention of Sean O’Hagan, a brilliant music reviewer with The Observer, who praised the album’s “vaulting ambition. It is neither folk nor jazz nor blues, though there are traces of all three in the music and in Morrison’s raw and emotionally charged singing”.  O’Hagenlater declared Astral Weeks “perhaps the greatest work of art to emerge out of the pop tradition.”

Greil Marcus, Rolling Stone’s first rock critic (who had reviewed the album very favorably in 1969) and a noted music author said that Martin Scorsese told him that the first half of his movie Taxi Driver was based on Astral Weeks. In an NPR review, Marcus said he has listened to the Astral Weeks record more than any other.

“You can hear these moments of invention and gasping for air, and you reach your hand and close your fist and when you open your fist there’s a butterfly in it. There was really something there, but you couldn’t have seen it. You couldn’t have known.”

He asserts that Astral Weeks ended up a touchstone – “a common language” that reached across generations. 

“I was so shocked when I was teaching a seminar at Princeton just a couple years ago, and out of 16 students, four of them said their favorite album was Astral Weeks. Now, how did it enter their lives? We’re talking about an album that was recorded well before they were born, and yet it spoke to them. They understood its language as soon as they heard it.”

• Elvis Costello: “Astral Weeks is still the most adventurous record made in the rock medium, and there hasn’t been a record with that amount of daring made since.”
• Johnny Depp, in a Rolling Stone interview in 2008, recalled how when he was a preteen his older brother (by ten years) tiring of Johnny’s favorite music of the time said, “‘Try this.’ And he put on Van Morrison’s Astral Weeks. And it stirred me. I’d never heard anything like it.”
• Steven Van Zandt (Bruce Springsteen’s E Street Band) said: “Astral Weeks was like a religion to us.”
• Alan Light of CNNTime magazine: “Astral Weeks didn’t reach the charts, but its mystic poetry, spacious grooves, and romantic incantations still resonate in ways no other music can.”
• Glen Hansard of The Frames says that he was captivated by the feeling of freedom when he first heard the album. Hansard says: “It made me realize that so much of what makes music great is courage, and up to that, what I thought made music great was practice and study…This album says there’s more to life than you thought. Life can be lived more deeply, with a greater sense of fear and horror and desire than you ever imagined.”

People who got the album under their skin (including, obviously, me) never let it go. As a result, the album born of desperation, death, and pain now regularly outpolls its modest sales.

• Mojo, 1995, declared Astral Weeks the second best album ever made.
  
• London Times 1993, called it the third greatest album of all time
• Time Magazine, 1996 declared it the third greatest album of all time.
• MTV, 1997, said it was the ninth greatest album of all time
• Rolling Stone, 2003, called it #19 of all time

In November 2008, Van Morrison performed two concerts at the Hollywood Bowl in Los Angeles, playing the entire Astral Weeks album. The band featured Jay Berliner, who played on the album. A DVD of the concert was distributed exclusively by Amazon, but is now scarce – reportedly withdrawn at Morrison’s insistence.

Many, many people have never encountered Astral Weeks. If by chance, you are one of them, stop the madness now. Your universal music vendor has it available here. You can get a CD of the Astral Weeks live concert here.

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A quick search will verify that JamSideDown has both criticized and admired Steve Jobs more than any other CEO. I dislike his high control business strategy and personality but I think that he is America’s finest CEO and that every leader should study his public presentations. He embodies “the intersection of liberal arts and technology” and has transformed several industries. Our grandchildren and their grandchildren will study his life and work. Steve Jobs will be a household name in a hundred years and still widely recognized in five hundred. Few can make that claim. 

The news yesterday that he would take medical leave from Apple was obviously very sad – you don’t take medical leaves unless you have medical challenges. The news has sent his Stanford commencement speech scurrying around the internet again — as it should. In it, Jobs reflects on lessons learned from setbacks: dropping out of college, getting fired, and getting sick. His advises graduates to follow the Whole Earth catalog maxim and “Stay Hungry. Stay Foolish”. Embedded below and worth watching.

The news of Jobs’ medical leave brought to mind a story told to me by a friend whose wife had developed a nasty cancer. She was receiving chemo and experimental treatments at Stanford and she felt miserable. Her hair had fallen out, she had a chronic cough, and she did not look her best — few cancer patients do.

One day my friend and his wife were taking a walk on a nice afternoon in their Palo Alto neighborhood. Most of the people they encountered averted their eyes and walked by, but one guy stopped them, asked his wife directly about her cancer, and proceeded to exchange ideas with her about different experimental treatments, medications, physicians, approaches to managing nausea, etc. After chatting for a few minutes, their paths parted and she thanked him for his thoughts. She remarked to her husband that it was rare to meet a stranger who could engage cancer victims so openly. 

You know the ending. My friend realized that his wife had no idea who the stranger was. He had to tell her that she had been speaking with Steve Jobs. 

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Residents fled to the George Washington Elementary School on St. Claude Avenue, which had been hastily converted into a neighborhood shelter. At night, terrified and sweltering families were crammed into the school in complete darkness without food or water. 

On the second night of the disaster a 6’3” white man charged into the shelter with a flashlight and announced in a Texan drawl “This is your President! I’m here to help you!” Lyndon Johnson had flown to New Orleans, toured the flooded areas and instinctively sought out those in greatest need. 

Was this political showmanship? Of course. Was it also an act of genuine compassion? David Remnick reported years later that LBJ recorded his visit to the shelter in his diary as a

“mass of human suffering,” with people calling out for help “in terribly emotional wails from voices of all ages. . . . It was a most pitiful sight of human and material destruction.”

The visit made a huge difference to the federal response to Betsy. LBJ combined showmanship with an astute knowledge of the levers of federal power. 

The President flew back to Washington and the next day sent (New Orleans mayor Victor Hugo) Schiro a sixteen-page telegram outlining plans for aid and the revival of New Orleans. “Please know,” Johnson wrote, “that my thoughts and prayers are with you and the thousands of Louisiana citizens who have suffered so heavily.”

I recalled the story of LBJ and hurricane Betsy while following the Twitter feed of Corey Booker, the flashy and articulate mayor of Newark, New Jersey after the town was hit with a massive blizzard, quickly dubbed the snopocalypse.

As New York mayor Michael Bloomberg has discovered, a blizzard is a large political hazard. Unlike a life-threatening disaster that brings people together and calls on their bravery and sacrifice, a blizzard for most people is a massive inconvenience. Obviously it can be life-threatening for newborns, dialysis patients, and others in need of immediate care, but for most people, a blizzard is a reason to complain about city services.

The political playbook for politicians in these moments revolves around command centers, helicopter tours, and media events crafted around effective camera angles and network news deadlines. A governor or a mayor wants to appear busy and engaged, demonstrate concern, and assemble and deploy resources from a well-staffed command center. He or she is much less likely to personally deliver aid because, in business terms, a well-run command center is scalable. A leader wielding a shovel isn’t.

Booker ignored the book. A natural showman in the tradition of Barack Obama, Booker is black, well educated, Stanford all-star athletic, and charismatic. He is a master of the stage – indeed some wish he displayed equivalent passion for the gritty work of governing. Street-savvy and tweet-savvy do not turn out to be the same thing.

Booker responded to the first 24 hours of the blizzard with a shovel, a four-wheel drive vehicle, and 75 tweets from various locations in Newark. These short messages are easily readable by any of the million plus people who follow @CoryBooker on Twitter. He moved around the city, praising, promising, congratulating, and cajoling cops, citizens, and cleanup crews. I wasn’t there, but it was interesting to follow his progress. He kept it up for 24 hours straight and started up again a few hours later. Sample Tweet: “I’ll dig you out”. He meant it — and on more than one occasion, he did it.

Has Booker created a modern version of LBJ – hands on, PR-savvy leader who directs government resources from the scene of the disaster? Does this approach make sense? Is a city well served by a cleanup schedule dictated by mayoral Tweets? Can a tweeting mayor scale? Should more leaders behave this way? From a command perspective, isn’t a captain who is a roving tweeter the classic loose canon on the ship of state?

The Trenton Star-Ledger thinks so. 

…on the ground in Newark yesterday, law enforcement officials, city leaders and residents saw the mayor’s performance as more akin to a “snowjob.” They blamed Booker for an incoherent and haphazard approach to plowing that left many residents of the state’s largest city stranded 48 hours after the snow had stopped.

“This was not an impressive performance by the city at all,” said North Ward Councilman Anibal Ramos. Instead of tweeting, Ramos said, “The mayor needs to be in a war room executing a cleanup plan.”

Whether Booker is the politician of the future or simply a politician with a new PR trick depends on why he tweets and why he shovels. Is it simply showmanship, or is it also civic engagement?

Did Booker actually mobilize others with his calls to go door-to-door looking for elderly citizens in need? If he wants to model engagement, why not set up hashtags (#NewarkStorm) so that others could contribute to and learn from a common emergency feed? Why not set up neighborhood feeds or lists so that others could copy the mayor’s example and self-organize?

I like Cory Booker a lot. I admire his commitment, his energy, and his bias for action. He is a tremendous role model. But for a reason is Booker more popular outside of Newark than in the city. If Booker is really trying to define a new politics of engagement, we need to see who is now engaged and how. Michael Bloomberg is not the only politician who will be asking these questions; Barrack Obama needs to know the answer as well. 

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DeLong recently gave his students some well thought out advice: What Econ 1 Students Need to Remember Most from the Course” followed shortly by “What Econ 1 Students Need to Remember Second Most from the Course“. This is a brief, brilliant introduction to economic thinking (and the comments he received are worth a read as well). With the Jamkid home from Chicago and preparing to enroll in its fabled microeconomics course in the new year, it seems fitting to republish it (although the emphasis is mine). Savor the post like a fine glass of wine and perhaps with one.

“Economics”, writes DeLong, “deals with those things that we want but that are “scarce.” We economists care about commodities whenever there are not enough of them for all of us to be satisfied that we have all that we want. Under those circumstances societies then have to–we have to–figure out whether it is worth making more of these scarce commodities. And then, if we do make more of them, we then need to figure out who is going to get to use them.

Where things are not scarce (the air, for example), that is not economics. Where we do not care that is not economics either. Where things are both scarce and where we care, we have the economic problem.

How ought a society to go about dealing with the economic problem? How should we–collectively–decide whether it is worth our while to make more of any particular commodity? And if we do decide to make more of them, how ought we to decide who is going to get to use them?

At this point I need to pause and note two facts about the world. Most scarce things that we care about are “rival.” And most scarce things that we care about are “excludable.” By “rival” I mean the only one person can use it at a time. I am now using this iPad to read my lecture notes. Because I am now using it, you cannot be. By “excludable” I mean that it is relatively easy to keep someone from making use of a commodity. I can keep your cows from eating my grass by putting up a barbed-wire fence.

Because commodities are “rival,” somebody’s use of a particular good imposes an opportunity cost on the rest of society. Because I am using this iPad, there is one fewer iPad for the rest of you to use. My use restricts your opportunities. A good economic system would make me take account in my decision-making of any reduction in your opportunities and resources that might be caused by my actions.

This is where the market economy comes in.

Let us assign each newly-produced commodity a particular person. Call this person the “owner.” Let the owner decide who is going to get to use the commodity. Let the owner exclude all others who from using the commodity. And let the owner charge the designated user he or she has decided upon a “price” for the right to make use of this commodity.

This simple institutional arrangement has a huge number of advantages as societal mechanism for planning and coordinating the production and distribution of scarce, rival, excludable commodities.

It solves the problem of production–what commodities we should try to make more of. Individuals look forward into the future and recognize that others will be willing to pay them high prices for commodities they greatly desire. That gives individuals an incentive to figure out how to make more of those scarce, rival, excludable commodities that are scarcest.

It solves the problem of economizing--of how to get people to economize on their own consumption and not hog too great a share of society’s total resources for themselves. Because they have to pay the owners the prices the owners ask, their eyes may be bigger than their stomachs but their wallets generally will not be.

It solves the problem of distribution–of determining who is going to get to use newly-produced commodities. The owner has an incentive to choose the person willing to pay the highest price–and the person willing to pay the highest price is, in some sense, the person who values it the most, to whom it is scarcest.

Moreover, it solves the problem of coordination: As long as market prices are free to move to equalize quantities supplied and demanded, there does not need to be any huge centralized computer bureaucracy keeping track of everything and making sure that plans add up. The market will coordinate itself.

And it solves the problem of information: In a market economy with commodities with owners, decision-making is pushed out to the periphery of society where people already know what is going on. You don’t need any huge centralized computer bureaucracy collecting and processing information–and where people do discover that there are things that they don’t know but need to learn, why knowledge of something and that somebody else would like to learn it is also a commodity and those who know those two facts are its owners.

It is hard to imagine a simpler institutional framework–owners and prices–that could solve those five problems so very well.

At this point I need to pause and point out a lucky consonance between the requirements of a societal institution for producing and allocating rival, excludable, scarce commodities on the one hand and the psychological propensities of us East African Plains Apes on the other. That we believe that things are ours and that we own them is perhaps not so surprising–it appears deeply deeply engraved in mammalian psychology. Squirrels certainly act as though they believe that they “own” nut-foraging sites. Dogs believe that they “own” bones. We East African Plains Apes, however, not only believe that we own things–we like to give them away. We are animals that solidify our own societal bonds via relationships of gift-exchange. And it is this psychological propensity to engage in gift-exchange–what Adam Smith called our natural propensity to truck, barter, and exchange in such a way that both sides are happy because they feel that they have gained something from the deal–that serves as the underpinning of our market economy.

That is the first thing I want you to remember from this course: The market economy, based on deep human psychological propensities, is an extraordinarily effective societal instrumentality for planning and coordinating the production and distribution of scarce, rival, excludable commodities.

Remember this. Keep it as an active process running on your wetware always. Lay up this idea in your heart and in your soul. Bind it for a sign upon your hand, that they may be as frontlets between your eyes. Teach it to your children when thou sittest in thine house, when thou walkest by the way, when thou liest down, and when thou risest up. And write them upon the door posts of thine house, and upon thy gates: that thy days and the days of thy children–or at least the commodities they own–may be multiplied.

What is the second most important thing for an econ one student to remember? It is how stringent the requirements for any form of “market efficiency” are: how many ways a market economy can go wrong and go badly wrong. I count seven ways that market economies can and do go badly wrong:

First, the market will go wrong if the wealth distribution is wrong. The market judges value by willingness to pay, and the rich are much more willing to pay them the poor, and those without wealth or income have no willingness to pay at all. If your wealth and income are zero, then the market literally does not care whether you live or die–it is of no interest to it at all.

Second, the market will go wrong if commodities do not have the proper characteristics. Remember: rivalry, excludability, and also information–people have to know what they are buying. An absence of or imperfect rivalry–increasing returns to scale in production or consumption of any sort–and the market will go wrong. An absence of or imperfect excludability–free-rider problems of any sort, or any failure of property rights definition or enforcement–and the market will go wrong. An absence of good information about exactly what you are buying or selling–adverse selection or moral hazard problems of any sort–and the market will go wrong.

Third, the market will go wrong if market agents do not take the prices at which they buy and sell as given but rather have some control over the prices at which they transact. The belief that the market is efficient hinges on the absence of market power–as well as on the proper income distribution, and on the proper characteristics of commodities.

Fourth, the market will go wrong if prices do not equalize quantities supplied and quantities demanded at every moment. “Price stickiness” for any sociological or psychological reasons disrupts the market’s ability to function.

Fifth, the market will go wrong if Say’s Law breaks down (MM: I did not take the course, but Says Law says roughly that we will not have failures of either aggregate supply or demand. The market will always clear.) If there is substantial downward pressure on spending on currently-produced goods and services because of an excess demand for financial assets of a kind that the private sector cannot immediately and instantaneously generate on a large scale, then the market will go wrong and we will have a downturn and a depression. If there is substantial upward pressure on spending on currently-produced goods and services because of an excess supply of financial assets of a kind that the private sector cannot immediately and instantaneously shed, then the market will go wrong and we will have a burst of inflation that will disrupt the functioning of the price system.

Sixth, the market will go wrong whenever its prices function as forecasting mechanisms. A proper forecasting mechanism would weigh each individual’s opinion by the precision of his or her knowledge. A market tends on the contrary to weigh each individual’s opinion by his or her wealth. This means that whenever economic processes tend to revert to seem average level that the market is likely to get things wrong, for when prices rise above average those who are optimistic become richer and their opinions carry more weight and so prices tend to rise further above their likely long-run fundamental values. Bubbles and crashes, manias and panics, are thus built into the system.

Seventh, the market will go wrong whenever individuals are bad judges of their own long-term interests–note that I say when, not if. Humans are very bad at assessing and dealing with risk. Humans are not that great at appropriately weighting different conflicting pieces of information. And humans are absolutely horrible at dealing with substances or patterns of behavior that can be addictive.

Whenever the system falls into any one of these seven arenas of psychological, behavioral, or institutional myopia and market failure, the market will go wrong. A good government will put its thumb on the scale in order to offset all of these seven forms of market failure. A great government will have foresight and take care to structure political-economic institutions to make these seven arenas of myopia and market failure as small as possible.

Remember this too. Keep it as an active process running on your wetware always. Lay up this idea in your heart and in your soul. Bind it for a sign upon your hand, that they may be as frontlets between your eyes. Teach it to your children when thou sittest in thine house, when thou walkest by the way, when thou liest down, and when thou risest up. And write them upon the door posts of thine house, and upon thy gates: that thy days and the days of thy children–or at least the commodities they own–may be multiplied.

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According to current polls, Whitman will shortly join Democrat Al Checci, conservative Republican Michael Huffington, and very long list of others who have invested millions of their own dollars in vain pursuit of higher office. Whitman is the latest candidate to make two arguments to voters: first, that private sector executive experience is a meaningful qualification for public sector executive office and second, that she was in fact a successful CEO at eBay.  (For the record, Whitman was also briefly CEO of FTD, the floral delivery company, an experience so thoroughly embarrassing that the Republican Party never refers to it). 

Both assertions are flat wrong. If Whitman would make a fine governor, it would not be for either of these reasons.

CEOs often discover too late that the skills of a good public leader are quite different from those of a company leader. Political leaders have executive authority, but significantly less control over the organization. They frequently cannot allocate resources or replace people — two things that CEOs do all the time. The scope and complexity of the problems are vastly different, as is the complexity of the organization. Public leaders have much less flexibility than private ones and the standards of success are much less exact. 

A few CEOs are the exceptions that help prove the rule. Michael Bloomberg is has proven a talented mayor of New York City, Jon Corzine has been a credible Senator from New Jersey, and both George and Mitt Romney were CEOs of significant organizations before becoming the respective governors of Michigan and Massachusetts. Note that in each of these cases however, “executive experience” was backed by a very substantial personal fortune -- it is by no means clear that experience alone would have won them the office.

Also, each of these individuals was, in fact, an exceptional business leader. I would have voted for any of them (including Mitt Romney as governor, but excluding his recent and inexplicably craven run for President). There is something to be said for practical problem solvers replacing ideologues in public office.

So, was Meg Whitman such an exceptional leader and practical problem solver at eBay? Absolutely not. First, eBay did not actually require talented leadership. A member of the senior leadership team was once quoted as saying “A monkey could run this business” because eBay was the online flea market whose only real job was to collect tolls from sellers. Meg was the monkey in charge and she was strapped to a rocket that made her rich — but that is hardly the same thing as leadership.

But she held the reins for ten years and made some important decisions. Let’s review them by first looking at what Whitman did not do. Crucially, like a deer in headlights, she took no advantage of eBay’s extremely high stock price. 

When new technology companies first attract capital, the value of the company’s stock often skyrockets as investors swarm in. Are they being irrational? Perhaps, but what they really are is uncertain as to the economic potential of the business. So they effectively say to a CEO “for you, money is almost free — so we want you to expand your business rapidly and acquire any other business that will help you do this.”

In 1999 Business Week ran on its cover a picture of a bat-wielding Meg Whitman facing off with Amazon.com CEO Jeff Bezos. That year, Bezos three times announced three acquisitions the same day — much as Google does today. Business Week fawns on the powerful and profitable eBay business model and heaps scorn on the unprofitable Amazon. But Bezos used his cheap equity to enter new markets and related businesses. Today Amazon is earth’s largest retailer and provides a huge array of corporate services, from fulfillment, to payment processing, to cloud-based hosting. It’s market value, which was a fraction of eBay’s at the time of the article, is now more than double eBay.

Whitman was a deer in headlights because she is at core a corporate manager, not an entrepreneur. She did not start the company or risk her own money on it. She was handed a magical business — truly a goose that laid golden eggs — and told not to mess it up. 

Whitman did acquire businesses — and reliably overpaid and under integrated them. In 2000, she paid $350 million for Half.com, a terrific company that was only six months old, but never integrated it into the core eBay shopping experience. She bought shopping.com a very strong shopping engine, long after it was clear that search engines like Google would supplant them in the marketplace. She overpaid massively for PayPal — even though she was the company’s only customer! And relative to Google, Facebook, Apple, or Amazon, Whitman has left both eBay and PayPal strategically paralyzed, locked into their current business models and positioning. PayPal should have become the next Visa. Instead, it is about to be dismembered by Apple, Google, and about a dozen startups. 

And famously, Meg Whitman purchased Skype for $4.1 billion. A phone company. There was chatter at the time about customers being able to call sellers that made not a lick of sense. She sold it later for $2.75 billion before the buyers learned that they would have to pay even more for the core IP of the company — which eBay had neglected to buy! Sort of like overpaying for a house and selling it for a loss only to realize that you only owned the front lawn. When this was revealed, it was a howl heard ’round the valley. 

Even as a custodial leader, Whitman managed to embarrass the company on more than one occassion. She resigned her Goldman Sachs directorship amidst revelations that she had been privy to inside deals “spinning” IPO stock — activity that has always been ethically felonious but was legal at the time. She once got so angry with one of her subordinate, communications employees, Young Mi Kim, that she shoved her. Kim sued and settled for $200,000. Today  Whitman dismisses the matter quicker than stories of her undocumented nanny or her failure to vote for two decades, saying “In any high-pressure working environment, tensions can surface.” 

We might forgive Meg Whitman for a crappy website, backwards-facing technology, and sullen inattention to user experience — although most online businesses get killed if they behave this way. But we should not forgive desultory leadership. Meg Whitman is no Michael Bloomberg. She is running for governor only because she is able to write very large checks. For Whitman, eBay was a stroke of unbelievable luck. Californians can do better — and evidently will.   

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