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From: Sam Citron5/1/2006 10:26:19 AM
   of 15
 
Bernard Lewis
A Sage in Christendom {WSJ Commentary]
By FOUAD AJAMI
May 1, 2006; Page A14

Bernard Lewis came to the New World in the nick of time. Fate -- or, more appropriately, history -- decreed his American journey and the direction it would take. The historian, who will turn 90 in a handful of days, had come to Princeton from London, at the age of 58, in 1974, to do the work of Orientalism which had gained him scholarly renown. But there would be no academic seclusion for him in the years after. The lands of Islam whose languages and cultures he knew with such intimacy would soon be set ablaze. And his adopted country, the bearer of the imperial mantle shed by his own Britannia, would in time make an honored place for him, and all but anoint him its guide into those burning grounds of the Islamic world. He would become the oracle of this new age of the Americans in the lands of the Arab and Islamic worlds.

In the normal course of things, America is not a country given to excessive deference to historians and to the claims of history, for the past is truly a foreign country here. But the past quarter century was no normal time, and Mr. Lewis no typical historian. He knew and worked the archives, it is true; and he mastered the languages of "the East," standing at the peak of his academic guild. But there is more to him than that: He is, through and through, a man of public affairs. He saw the coming of a war, a great civilizational struggle, and was to show no timidity about the facts of this war. "I'll teach you differences," Kent says to Lear. And Mr. Lewis has been teaching us differences. He knew Islam's splendor and its periods of enlightenment; he had celebrated the "dignity and meaning" it gave to "drab impoverished lives." He would not hesitate, then, to look into -- and to name -- the darkness and the rage that have overcome so many of its adherents in recent times.

* * *
We anoint sages when we need them; at times we let them say, on our behalf, the sorts of things we know and intuit but don't say, the sorts of things we glimpse through the darkness but don't fully see. It was thus in the time of the great illusion, in the lost decade of the 1990s, when history had presumably "ended," that Bernard Lewis had come forth to tell us, in a seminal essay, "The Roots of Muslim Rage" (September 1990), that our luck had run out, that an old struggle between "Christendom" and Islam was gathering force. (Note the name given the Western world; it is vintage Lewis, this naming of worlds and drawing of borders -- and differences.) It was the time of commerce and globalism; the "modernists" had the run of the decade, and a historian's dark premonitions about a thwarted civilization wishing to avenge the slights and wounds of centuries would not carry the day. Mr. Lewis was the voice of conservatives, a brooding pessimist, in the time of a sublime faith in things new and untried. It was he, in that 1990 article, who gave us the notion of a "clash of civilizations" that Samuel Huntington would popularize, with due attribution to Bernard Lewis.

The rage of Islam was no mystery to Mr. Lewis. To no great surprise, it issued out of his respect for the Muslim logic of things. For 14 centuries, he wrote, Islam and Christendom had feuded and fought across a bloody and shifting frontier, their enmity a "series of attacks and counterattacks, jihads and crusades, conquests and reconquests." For nearly a millennium, Islam had the upper hand. The new faith conquered Syria, Palestine, Egypt and North Africa -- old Christian lands, it should be recalled. It struck into Europe, established dominions in Sicily, Spain, Portugal and in parts of France. Before the tide turned, there had been panic in Europe that Christendom was doomed. In a series of letters written from Constantinople between 1555 and 1560, Ogier Ghiselin de Busbecq, imperial ambassador to the court of Suleyman the Magnificent, anguished over Europe's fate; he was sure that the Turks were about to "fly at our throats, supported by the might of the whole East." Europe, he worried, was squandering its wealth, "seeking the Indies and the Antipodes across vast fields of ocean, in search of gold."

But Busbecq, we know, had it wrong. The threat of Islam was turned back. The wealth brought back from the New World helped turn the terms of trade against Islam. Europe's confidence soared. The great turning point came in 1683, when a Turkish siege of Vienna ended in failure and defeat. With the Turks on the run, the terms of engagement between Europe and Islam were transformed. Russia overthrew the Tatar yoke; there was the Reconquista in the Iberian Peninsula. Instead of winning every war, Mr. Lewis observes, the Muslims were losing every war. Britain, France, the Netherlands and Russia all soon spilled into Islamic lands. "Europe and her daughters" now disposed of the fate of Muslim domains. Americans and Europeans may regard this new arrangement of power as natural. But Mr. Lewis has been relentless in his admonition that Muslims were under no obligation to accept the new order of things.

A pain afflicts modern Islam -- the loss of power. And Mr. Lewis has a keen sense of the Muslim redeemers and would-be avengers who promise to alter Islam's place in the world. This pain, the historian tells us, derives from Islam's early success, from the very triumph of the prophet Muhammad. Moses was not allowed to enter the promised land; he had led his people through wilderness. Jesus had been crucified. But Muhammad had prevailed and had governed. The faith he would bequeath his followers would forever insist on the oneness of religion and politics. Where Christians are enjoined in their scripture to "render unto Caesar the things which are Caesar's and unto God the things which are God's," no such demarcation would be drawn in the theory and practice of Islam.

It was vintage Lewis -- reading the sources, in this case a marginal Arabic newspaper published out of London, Al-Quds Al-Arabi, in February of 1998 -- to come across a declaration of war on the United States by a self-designated holy warrior he had "never heard of," Osama bin Laden. In one of those essays that reveal the historian's eye for things that matter, "A License to Kill," Mr. Lewis would render into sublime English prose the declaration of bin Laden and would give it its exegesis. The historian might have never heard of bin Laden, but the terrorist from Arabia practically walks out of the pages of Mr. Lewis's own histories. Consider this passage from the Arabian plotter: "Since God laid down the Arabian Peninsula, created its desert, and surrounded it with seas, no calamity has ever befallen it like these crusader hosts that have spread in it like locusts, eating its fruits and destroying its verdure; and this at a time when the nations contend against Muslims like diners jostling around a bowl of food. . . . By God's leave, we call on every Muslim who believes in God and hopes for reward to obey God's command to kill the Americans and plunder their possessions whenever he finds them and whenever he can."

Three years later, the furies of bin Laden, and the cadence and content of his language -- straight out of the annals of older wars of faith -- would remake our world. There would come Mr. Lewis's way now waves of people willing to believe. They would read into his works the bewildering ways and furies of preachers and plotters and foot soldiers hurling themselves against the order of the West. Timing was cruel -- and exquisite. The historian's book "What Went Wrong?" was already in galleys by 9/11. He had not written it for the storm. He had all but anticipated what was to come. This diagnosis of Islam's malady would become a best seller. In a different setting, Mr. Lewis had written of history's power. "Make no mistake, those who are unwilling to confront the past will be unable to understand the present and unfit to face the future." We were witnessing an epic jumbling of past and present. It was no fault of this historian that we had placed our bet on the death of the past.

* * *
Mr. Lewis has lived a long and engaged life, caught up in the great issues of war and diplomacy -- and may he be with us as far as the eye can see, as long as life and good health permit. Some of his detractors, with an excessive belief in his talismans, have attributed to the historian all sorts of large historical deeds. For some, he is the godfather of the accommodation of years past between Turkey and Israel. For others, he inspired the Iraq war, transmitting to Vice President Dick Cheney his faith in the Iraq campaign as the spearhead of an effort to reform the Arab world. (It will, of course, help confirm this view that Mr. Cheney is set to speak to a conference today, hosted by the World Affairs Council of Philadelphia, in honor of Mr. Lewis.) In more recent writings on the historian, George W. Bush's "diplomacy of freedom" in Arab-Muslim lands is laid at Mr. Lewis's doorstep. The president was seen, in one account, with a marked-up copy of a Lewis article. We have come to a great irony: the conservative Orientalist holding out democratic hope for Iraq and its Arab neighbors, while his liberal critics assert the built-in authoritarianism of the Arab political tradition.

For Bernard Lewis, there is something now of the closing of a circle. As a young man, he had been on His Majesty's service during the Second World War, working for British intelligence between 1940 and 1945. The young medievalist had been pressed into modern government work, and that experience had given him his taste for contemporary political affairs. This new war is something of a return to his beginnings. For an immensely gregarious man of unfailing wit and personal optimism, a darkness runs through his view of the future of the Western democracies. "In 1940, we knew who we were, we knew who the enemy was, we knew the dangers and the issues," he told me when I pressed him for a reading of the struggle against Islamic radicalism. "In our island, we knew we would prevail, that the Americans would be drawn into the fight. It is different today. We don't know who we are, we don't know the issues, and we still do not understand the nature of the enemy."

The Muslim Brotherhood in Egypt, which once translated one of Mr. Lewis's books into Arabic, said that his book was "the work of a candid friend or an honest enemy." Either way, the Brotherhood said, it was the work of "someone who disdains falsification." And this, to me and to his countless readers, runs to the core of this historian's craft -- the aversion to falsification. He has been, always, a man of his own civilization and convictions -- a fact that accounts for the deep reservoirs of reverence felt for him in many Muslim and Arab lands. In the American academy, he may be swimming against the currents of postmodernism and postcolonial history; he has given up his membership in the Middle East Studies Association, of which he had been a founding member. But countless Arab and Iranian and Turkish readers recognize their tormented civilization in what he has written. They know that he has not come to the material of their history driven by bad faith, or by a desire for dominion. They take him at his word, a man of the Anglo-Saxon world, convinced that the ways of the West today carry with them the hopes of other civilizations. In one of his many splendid books, "Cultures in Conflict: Christians, Muslims, and Jews in the Age of Discovery," he gave voice to both his fears and to his faith. "It may be that Western culture will indeed go: The lack of conviction of many of those who should be its defenders and the passionate intensity of its accusers may well join to complete its destruction. But if it does go, the men and women of all the continents will thereby be impoverished and endangered."

* * *
Edward Gibbon once called the historian's "I" the "most disgusting of pronouns." In the main we see very little of that pronoun in Mr. Lewis's work. But in the academy he belongs to the ages. He is the peer, and inheritor, of the great Western scholars of Islam -- the Hungarian Ignaz Goldziher (1850-1921), the Dutchman Christiaan Snouck Hurgronje (1857-1936), the Frenchman Louis Massignon (1883-1962), the British Thomas Arnold (1864-1930), and Mr. Lewis's own teacher, Sir Hamilton Gibb (1895-1971). Mr. Lewis took to the East to understand his own world, because, as he tells us, Western civilization "did not spring like Aphrodite from the sea foam." He wanted to get to the mainsprings of Western civilization.

I shall set aside the ban on that "most disgusting of pronouns." I came to know Bernard Lewis the year he made his passage to America, on the Princeton campus. I was then at the beginning of my academic career, justifiably obscure and anxious. Mr. Lewis was one of the academic gods. I approached him with awe. But his grace was our bridge. I was of the old world he studied; he was keen to know the name of my ancestral village in southern Lebanon. I told him it was an obscure place without history, and gave him its name. He offered me an invitation to examine his archives, and said that he had the land deeds of that remote hamlet. It has been like this with Bernard Lewis: We travel by the light of his work. He weaves for us a web between past and present, and he can pick out, over distant horizons, storms sure to reach us before long.

Mr. Ajami, Majid Khadduri Professor at Johns Hopkins University's School of Advanced International Studies, is author of "The Foreigner's Gift: The Americans, the Arabs, and the Iraqis in Iraq," forthcoming from the Free Press in July.


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From: Sam Citron5/2/2006 12:56:07 PM
   of 15
 
<JK Galbraith> The New Industrial Economist [WSJ]
By DAVID R. HENDERSON
May 2, 2006; Page A16

John Kenneth Galbraith, one of America's most famous economists, died on Saturday at the age of 97. His fame came not from his technical accomplishments in academic economics but from his awesome writing ability, evidenced in 33 books and many more articles. He wrote almost all of his books -- certainly the ones that increased his fame -- for a general audience. He honed his writing ability while on the board of editors of Fortune magazine from 1943 to 1948. After that, he never stopped.

* * *
Galbraith competes with Milton Friedman as the most famous American economist. But whereas Mr. Friedman affected not only popular thinking but also the thinking of economists, Galbraith affected only the former. He himself recognized that reality, and often claimed it was due to his having challenged the "conventional wisdom."

He once remarked, at his wittiest and most on-target, that "In the choice between changing one's mind and proving there's no need to do so, most people get busy on the proof." Nevertheless, while mainstream economists were sometimes a little nasty in debating Galbraith, they did point out fundamental problems with his conclusions -- problems that he never seriously grappled with. Galbraith focused too much on the witty epigram. As one critic pointed out, his main form of argument for key assumptions in his model of the economy was "vigorous assertion."

Galbraith's three most important books, measured by sales and influence on popular thinking, were "American Capitalism: The Concept of Countervailing Power" (1952), "The Affluent Society" (1958) and "The New Industrial State" (1967). In "American Capitalism," Galbraith argued that giant firms had replaced small ones to the point where the "perfectly competitive" model no longer applied to much of the American economy. But not to worry, he argued. The power of large firms was offset by the countervailing power of large unions, so that consumers were protected by competing centers of power.

The late Nobel laureate George Stigler gave a pointed response in 1954. Stigler noted that before Roosevelt's cartel-forming National Recovery Administration started giving monopoly power to large businesses, in five of the six industries with the most powerful unions -- building trades, coal mining, printing, clothing and musicians -- there were many small firms rather than, as Galbraith's theory would have predicted, a few large ones. Moreover, noted Stigler, even if powerful labor unions offset the power of large firms, there was no assurance that this would help consumers -- now not only the firms but also the unions would have a desire to limit output and keep prices high and would simply be fighting over the monopoly rents.

In "The Affluent Society," Galbraith contrasted the affluence of the private sector with the "squalor" of the public sector, writing, "our houses are generally clean and our streets generally filthy." He attributed this to our failure to give the government enough of our resources to do its job. He appears never to have considered the more straightforward economic explanation for dirty streets -- one that is based on incentives. The model that applies to the streets is "the tragedy of the commons": No one owns the streets and, therefore, no one has an incentive to take care of them.

Many people liked "The Affluent Society" because of their view that Galbraith, like Thorstein Veblen before him, attacked production that was geared to "conspicuous consumption." But that is not in fact what Galbraith did. He argued, rather, that "an admirable case can still be made" for satisfying even consumer wants that "have bizarre, frivolous or even immoral origins." His argument against satisfying all consumer demands was more subtle than Veblen's. Galbraith wrote: "If the individual's wants are to be urgent, they must be original with himself. They cannot be urgent if they must be contrived for him. And above all, they must not be contrived by the process of production by which they are satisfied. . . . One cannot defend production as satisfying wants if that production creates the wants."

Really? The late Friedrich Hayek, co-winner of the 1974 Nobel Prize in economics, delivered the most fundamental critique of Galbraith's thesis. Hayek conceded that most wants do not originate with the individual; our innate wants, he wrote, "are probably confined to food, shelter and sex." All other wants we learn from what we see around us. Probably all our aesthetic feelings -- our enjoyment of music and literature, for example -- are learned. So, wrote Hayek, "to say that a desire is not important because it is not innate is to say that the whole cultural achievement of man is not important." Hayek could have taken the point further. Few of us, for example, have an innate desire for penicillin. It had to be first produced and then advertised before doctors could know about it. And it's safe to say that we've found it very valuable.

Galbraith's magnum opus was "The New Industrial State," in which he argued that large firms dominate the American economy. "The mature corporation," he wrote, "had readily at hand the means for controlling the prices at which it sells as well as those at which it buys. . . . Since General Motors produces some half of all the automobiles, its designs do not reflect the current mode, but are the current mode. The proper shape of an automobile, for most people, will be what the automobile makers decree the current shape to be." Well, no. Of course, GM failed to "decree" the shape of automobiles in the 1980s and continues to fail today, leading to huge losses of both money and market share. It seems consumers, whom Galbraith regarded as manipulable by Detroit and Madison Avenue, somehow didn't accept GM's "decree."

To his credit, Galbraith admitted some of this. In July 1982, the steel and auto companies he had claimed were immune from competition and recessions were laying off workers in response both to foreign competition and recession. Asked on "Meet the Press" whether he had underestimated the extent of risk that even large corporations face, he paused and replied, "Yeah, I think I did."

* * *
Galbraith was involved in politics early in his professional life. He advised Democrat presidential candidate Adlai Stevenson and, later, Presidents Kennedy and Johnson. He was also Kennedy's ambassador to India in the early 1960s. While there, Galbraith gave a series of speeches on economic development in which he hailed the role of government planning as opposed to economic freedom. In one speech, Galbraith stated, "The market cannot reach forward to take great strides when these are called for. . . . To trust to the market is to take an unacceptable risk that nothing, or too little, will happen." As is well known, the Indian government did not take the "risk" of relying on the market but, instead, stuck with its system of detailed controls over every industry. As is also well known, nothing, or too little, happened. India was mired in poverty which only began to lift after some decontrol started in 1991.

Galbraith was also one of the chief price controllers during World War II, as head of the price section of the government's Office of Price Administration. Unlike other economists involved with price controls, such as George Shultz during the Nixon administration and Frank Taussig during the Wilson administration, Galbraith emerged as an advocate of permanent price controls, an unpopular position among economists.

But there is one price control that John Kenneth Galbraith joined Milton Friedman in opposing in the 1960s: military conscription. He wrote, "The draft survives principally as a device by which we use compulsion to get young men to serve at less than the market rate of pay." For his outstanding leadership on this issue, many young men owe him a lot.

Mr. Henderson is a research fellow with the Hoover Institution and an economics professor at the Naval Postgraduate School's Graduate School of Business and Public Policy.

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From: Sam Citron5/2/2006 12:59:44 PM
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Urban Planners Are Blind To What Jane Jacobs Really Saw [WSJ]

By LEONARD GILROY
May 2, 2006; Page D8

Legendary author and urban theorist Jane Jacobs passed away last week at the age of 89. Her classic 1961 book, "The Death and Life of Great American Cities," delivered a damning indictment of postwar city planning and urban renewal efforts, revolutionizing the way we think about and plan our cities.

A working mother with no formal education in urban planning, Jacobs became an icon in the 1960s when she mobilized citizens to fight the redevelopment and highway-construction plans of New York City planning czar Robert Moses, who wielded almost unchecked power over the city's urban development during the mid-20th century. She famously led the effort that defeated Moses' plan to build an expressway through Manhattan's Washington Square Park and West Village, which would have displaced nearly 10,000 residents and workers and destroyed thousands of historic buildings.

Given urban planners' almost universal reverence for Jacobs, it is ironic that many have largely ignored or misinterpreted the central lesson of "Death and Life" -- that cities are vibrant living systems, not the product of grand, utopian schemes concocted by overzealous planners.

Modern planners have contorted Jacobs's beliefs in hopes of imposing their static, end-state vision of a city. They use a set of highly prescriptive policy tools -- like urban growth boundaries, smart growth, and high-density development built around light-rail transit systems -- to design the city they envision. They try to "create" livable cities from the ground up and micromanage urban form through regulation. We've seen these tools at work in Portland, Ore., for more than three decades. But the results have been dismal and dramatic. The city's "smart growth" policies effectively created a land shortage, constricting the housing supply and artificially inflating prices. By 1999, Portland had become one of the 10 least affordable housing markets in the nation, and its homeownership rate lagged behind the national average. It has also seen one of the nation's largest increases in traffic congestion and boasts a costly, heavily subsidized light-rail system that accounts for just 1% of the city's total travel. Not exactly how they planned it.

That's because these planning trends run completely counter to Jacobs's vision of cities as dynamic economic engines that thrive on private initiative, trial-and-error, incremental change, and human and economic diversity. Jacobs believed the most organic and healthy communities are diverse, messy and arise out of spontaneous order, not from a scheme that tries to dictate how people should live and how neighborhoods should look.

She felt it was foolish to focus on how cities look rather than how they function as economic laboratories. "The main responsibility of city planning and design should be to develop -- insofar as public policy and action can do so -- cities that are congenial places for [a] great range of unofficial plans, ideas and opportunities to flourish," Jacobs wrote.

Sadly, many in the Smart Growth and New Urbanism movements cite Jacobs as the inspiration for their efforts to combat so-called "urban sprawl" and make over suburbia with dense, walkable downtowns, mixed-use development, and varied building styles. While Jacobs identified these as organic elements of successful cities, planners have eagerly tried to impose them on cities in formulaic fashion, regardless of their contextual appropriateness and compatibility with the underlying economic order. In short, they've taken Jacobs's observations of what makes cities work and tried to formalize them into an authoritarian recipe for policy intervention.

As Jacobs opined in a 2001 Reason magazine interview, "[t]he New Urbanists want to have lively centers in the places that they develop....And yet, from what I've seen of their plans and the places they have built, they don't seem to have a sense of the anatomy of these hearts, these centers. They've placed them as if they were shopping centers. They don't connect."

Jacobs's ideas came from the heart. Her foray into urban theory was partly inspired by the failed urban renewal efforts of the post-World War II era that displaced tens of thousands of poor and minority residents and resulted in the isolation or destruction of previously vibrant neighborhoods in New York, Chicago, Pittsburgh and elsewhere.

Fundamentally, there is little difference behind the social engineering mentality of those who wrought the disaster of postwar urban renewal and the mindset of today's planners trying to regulate away suburbia in hopes of master-planned urban living for everyone.

More and more, these planners are calling for the centralization of land-use control under state and regional governments, usurping the American tradition of local control over development. In the view of many planners, this command-and-control bureaucracy is needed because municipal planning is too "uncoordinated" to achieve "societally beneficial" goals like open-space preservation, mass transit and urban densification.

But if they go back and reread "Death and Life," they'll find Jacobs rightly asking, "How is bigger administration, with labyrinths nobody can comprehend or navigate, an improvement over crazy-quilt township and suburban governments?"

She went on to ridicule the idea of regionalism as "escapism from intellectual helplessness" predicated on the delusion that the problems planners are unable to solve at the local level will somehow be more easily addressed on a larger-scale, concluding that "no other expertise can substitute for locality knowledge in planning."

Politicians and planners would do well to commemorate Jacobs by revisiting her work. Despite the best efforts of well-intentioned planners, you can't "create" a vibrant city or neighborhood. The best cities and neighborhoods just happen, and the best thing we can do is to step out of the way of innovators and entrepreneurs.

Mr. Gilroy is a certified planner and policy analyst at the Reason Foundation (www.reason.org).

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From: Sam Citron5/7/2006 12:32:03 AM
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Charles Koch [WSJ]
Private Enterprise

By STEPHEN MOORE
May 6, 2006; Page A8

WICHITA, Kan. -- Meet Charles Koch. Philosopher, engineer, self-trained economist, libertarian activist, philanthropist -- and the CEO of Koch Industries, a $60 billion, 80,000-employee empire, which just recently became the largest and most profitable privately held company in America.

But you've probably never heard of it.

Neither Charles Koch nor his firm are household names. Mr. Koch (pronounced "coke") has managed to live in relative obscurity despite being one of the richest men on the planet, with a net worth estimated at $14 billion. He is a man of modesty who craves none of the fame or public adulation that seems to preoccupy other members of the billionaires' club.


Charles Koch
Yet celebrity seems to intrude. On the day I visit the company's Kansas headquarters, his office is atwitter over a recent issue of Forbes magazine featuring the world's billionaires. The issue includes a glossy photo of Charles Koch smiling contentedly, and right below him on the page is a picture of a slightly better known titan: Oprah. Running in company like that is bound to bump up Mr. Koch's public profile -- whether he likes it or not.

My mission, then, is to unwrap at least a few of the secrets of his success.

* * *
Back in 1967, when Mr. Koch was in his early 30s, he became the reluctant president of the family business, then a $177 million, medium-sized oil firm. He recalls: "My father threatened that he was going to sell the company if I wouldn't come back home to Kansas from the East Coast and run it."

Nearly four decades later, that family company is a global conglomerate with net annual sales that exceed the GDP of many small nations, and it includes a diverse range of businesses supplying everything from jet fuel to plastic, asphalt to beef, toilet paper to lumber. It owns many familiar brand names such as Dixie cups, Stainmaster carpet and Brawny paper towels. The firm's financial performance numbers have been positively gaudy, with a rate of return on investment that has outpaced the Standard & Poor's 500 at least tenfold under Mr. Koch's stewardship.

"We couldn't have achieved the profitability we have," Mr. Koch insists, "if we had been a public company. No investor would have been patient enough to allow us to build a firm oriented toward long-term growth and profits." This is one of Mr. Koch's bugaboos regarding the deficiencies of modern corporate management. He notes, "The short-term infatuation with quarterly earnings on Wall Street restricts the earnings potential of Fortune 500 publicly traded firms. Public firms are also feeding grounds for lawyers and lawsuits."

He then confidently predicts: "Regulatory laws like Sarbanes-Oxley will only increase the earnings advantages of private firms. I would suspect that there will be more of these private company takeovers of publicly traded companies." He's referring to his blockbuster $21 billion purchase of Georgia Pacific last November, a Fortune 500 forest and paper company.

If Mr. Koch is right about the re-emergence of private corporate structures, it is a very big deal for the near-term future of financial markets. The hyperactive trend of the past decade to take companies public may be shifting into reverse gear. The Georgia Pacific deal, which was the largest acquisition of a publicly traded company by a private firm in U.S. history, would seem to confirm Mr. Koch's thesis. "Since the Georgia Pacific purchase," he tells me, "other publicly traded companies have come calling, asking whether we would be interested in taking them private, too."

This creative forward-thinking should come as no surprise, because Mr. Koch is immersed in the ideas of liberty and free markets. Whereas the bookshelves of most of America's leading CEOs are stocked with pop corporate management and "how to succeed" books, Mr. Koch's office is a wall-to-wall shrine to writings in classical economics, or, as he calls it, "the science of liberty." The authors who have had the most profound influence on his own political philosophy include F.A. Hayek, Ludwig von Mises, Joseph Schumpeter, Julian Simon, Paul Johnson and Charles Murray. Mr. Koch says that he experienced an intellectual epiphany in the early 1960s, when he attended a conference on free-market capitalism hosted by the late, great Leonard Reed.

Mr. Koch is by training a scientist, with master's degrees from MIT in nuclear and chemical engineering. Despite his business success, he has no MBA or formal management training. Mr. Koch sees that as an advantage. "Being an engineer, I realized there's an objective reality that helps one understand the rules and conditions that improve the human condition," he says. "Laws and principles that facilitate the advancement of peace, prosperity and social progress are as immutable as the laws that work in science. . . . Politicians often come up with misguided policy solutions," he continues, "because they suffer from Hayek's 'fatal conceit' and believe they can violate basic laws of economics. They are just as misguided as the man who jumps out the 14th floor of a building convinced that he can repeal the law of gravity."

As we continue, Mr. Koch becomes increasingly animated. He discusses another seminal work in his collection, F.A. Harper's 1957 "Why Wages Rise." The book demonstrates "that wages rise not because of unions or government action, but because of marginal productivity gains -- people get more money when they produce more value for other people." Then he confides, "I was so thrilled by this revelation that I had what Maslow called a 'peak experience.'"

Ideas seem to exhilarate him. This no doubt explains in part why this professorial CEO delivers "dozens and dozens" of lectures around the country to his employees on these very topics. But what does any of this have to do with explaining his company's prodigious profitability? Well, everything -- he believes. Mr. Koch contends that the key insight of his business career was melding these philosophical insights about the way the wealth-creation process works into a business operating system called "Market Based Management." This system, which he has trademarked, enables every division of his business empire to operate as a separate, autonomous, profit-maximizing unit. It is intended to reward employees who think like entrepreneurs.

"Long-term success entails constantly discovering new ways to create value for customers and building new capabilities to capture new opportunities," he instructs. "In this sense, maintaining a business is, in reality, liquidating a business." Mr. Koch likens the cycle to Schumpeter's "creative destruction" -- where the old and inefficient are ruthlessly swept away by the new.

What we have here are the theories of supply-side economics operating on the micro-level of the firm. Incentives matter; competition fosters innovation; property rights must be firmly established. Koch Industries gives big financial bonuses for entrepreneurial behavior by employees, whether it's a project head or a janitor. The idea is to reward all activities that add to the bottom-line profitability of the firm. "We want our employees to act like owners," Mr. Koch explains. Similarly, employees earn "decision rights" for past successes. "Just as central planning is a failure in running government, so it is at the level of the firm," he says, repeating one of his favorite operating tenets.

Some of the ideas that undergird Market Based Management seem fairly commonsensical to me, and I'm not entirely sold on the notion that this program somehow represents a seismic breakaway from what is taught at Harvard Business School. Some former employees also complain that top management's absolutist devotion to MBM has created a cult-like atmosphere that can be overbearing. To succeed at the company, they say, one has to become a "Koch addict" -- which means, in part, buying into MBM. Mr. Koch himself willingly concedes that the ideas don't bear fruit with everyone, and that many times employees simply "memorize and regurgitate the ideas," rather than apply them on the job. But even the deepest skeptic can't argue with the bottom-line results. Quite simply, Mr. Koch's firm has tripled in size and profitability in the last decade, among its many other achievements.

* * *
Charles Koch -- no surprise -- disdains government and the political class. He has invested tens of millions of dollars into free-market think-tanks and political activist groups (including several founded by this author). He's disgusted with the runaway federal budget under the Republicans, and he proposes that "every new law should be subject to the question: Will it strengthen the culture of prosperity?" Won't about 90% of the laws fail that test? "Yes, that's exactly what I mean," he replies. "But the problem isn't the people in government, it's the system -- the incentives are perverse."

Mr. Koch's latest crusade to spread the ideas of liberty has been his sponsorship of a twice-yearly conference that gathers together many of the most successful American entrepreneurs, from T. Boone Pickens to former Circuit City CEO Rick Sharp. The objective is to encourage these captains of industry to help fund free-market groups devoted to protecting the fragile infrastructure of liberty. That task seems especially critical given that so many of the global superrich, like George Soros and Warren Buffett, finance institutions that undermine the very system of capitalism that made their success possible. Isn't this just the usual rich liberal guilt, I ask. "No," he says, "I think they simply haven't been sufficiently exposed to the ideas of liberty."

Sounds as though Messrs. Soros and Buffett would benefit more from sitting down with Charles Koch than I would. For my part, after listening to this natural-born teacher exalt the superiority of free markets and the boundless wealth that they can create, I feel as though I'm about to experience one of Maslow's "peak experiences" myself. But our time is up, and if Mr. Koch has learned nothing else from his spiritual mentors, it's the concept of opportunity cost. Time is money, and it's time to get back to his greatest passion of all: building the profitability of his world-class company.

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From: Neeka5/12/2006 3:01:19 AM
1 Recommendation   of 15
 
Great idea for a thread.

Good luck!

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To: Sam Citron who wrote (4)5/14/2006 10:17:18 AM
From: Chas.   of 15
 
what a shame that the subject is so "relative" to ones personal ideologies and thoughts......

Nixon...Mao...Einstein...Malthus...Jefferson...etc, etc, etc....

regards

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From: Sam Citron5/16/2006 10:19:41 AM
   of 15
 
Soros fund cuts investment in Microsoft
Tue May 16, 2006 9:58 AM ET
WASHINGTON, May 16 (Reuters) - Billionaire financier George Soros slashed his investment fund's stake in Microsoft Corp. (MSFT.O: Quote, Profile, Research), the world's No. 1 software company, from 1.38 million shares to 251,750.

Soros Fund Management reported the change late on Monday in a U.S. regulatory filing that details its holdings as of March 31.

The filing with the Securities and Exchange Commission also disclosed that Soros had taken up a 857,400-share stake in Boston Scientific Corp. (BSX.N: Quote, Profile, Research), which recently completed its acquisition of Guidant Corp. to create one of the world's largest medical device companies, and a 698,500-share stake in communications equipment maker Cisco Systems Inc. (CSCO.O: Quote, Profile, Research)

The fund has also snapped up small portions of H&R Block Inc. (HRB.N: Quote, Profile, Research) and 10,000 Class A shares of Google Inc. (GOOG.O: Quote, Profile, Research)

H&R Block, the largest U.S. tax preparer, restated its annual financials from 2004 and 2005 in late March, and last week cut its outlook for 2006, citing weak results for its mortgage services.

Soros reported some changes in financial exchange ownership, more than doubling its stake in Nasdaq Stock Market Inc. (NDAQ.O: Quote, Profile, Research) to 553,200 common shares and taking on a 89,750-share stake in NYSE Group Inc. (NYX.N: Quote, Profile, Research)

As of March 31, the fund's total fair market value was $2.72 billion, up from $2.48 billion on Dec. 31, filings show.

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From: Sam Citron5/19/2006 10:03:50 AM
   of 15
 
<John Stuart Mill> Thoroughly Modern Mill [WSJ]

By ROGER SCRUTON
May 19, 2006; Page A10

May 20 sees the 200th anniversary of the birth of John Stuart Mill, the greatest exponent of 19th-century liberalism, whose philosophy still dominates jurisprudence in the English-speaking world. Mill was a many-faceted intellectual who wrote on all aspects of philosophy, on law and morals, on political economy, and on poetry and the arts. His home-schooling at the hands of his father, the economist and historian James Mill, was a model of rigor, causing him to read and write Greek aged 6, to master Latin aged 9, and to have acquired a thorough grounding in history and mathematics aged 10, when he began work on a history of Roman government. Mill later developed a taste for poetry, acquired a perfect knowledge of French, and, despite his agnostic upbringing, read deeply in the Bible, which he believed to be one of the two Great Books, the other being Homer.

Mill was never a member of a university, but devoted his life to self-education while holding lucrative posts at the India Office. He suffered a serious nervous breakdown in 1836. This breakdown, described in Mill's remarkable "Autobiography," was in part a response to the hard-headed utilitarianism of his father and his circle of "Philosophical Radicals." The cost-benefit morality that James Mill had inherited from Jeremy Bentham, and which he had instilled into his son, left Mill bereft of all emotional succor.

Utilitarianism ("that action is right which promotes the greatest happiness of the greatest number") was a philosophy of the head which seemed to make no room for the heart. Mill recovered through reading Wordsworth, found consolation with Harriet Taylor, the wife of a tolerant gentleman who no doubt had good grounds for trusting in his wife's chastity, and subsequently married the widowed Mrs. Taylor to continue in an apparently sexless union.

Mill's rebellion against utilitarianism did not prevent him from writing a qualified defense of it, and his "Utilitarianism" is acknowledged today as one of the few readable accounts of a moral disorder that would have died out two centuries ago, had people not discovered that the utilitarian can excuse every crime. Lenin and Hitler were pious utilitarians, as were Stalin and Mao, as are most members of the Mafia. As Mill recognized, the "greatest happiness principle" must be qualified by some guarantee of individual rights, if it is not to excuse the tyrant. In response to his own wavering discipleship, therefore, he wrote "On Liberty," perhaps his most influential, though by no means his best, production. At the time, Benthamite ways of thinking were influencing jurisprudence, and arguments based on the "general good" and the "good of society" appealed to the conservative imagination of the Victorian middle classes. It seemed right to control the forms of public worship, to forbid the expression of heretical opinions, or to criminalize adultery, for the sake of a "public morality" which exists for the general good. If individual freedom suffers, then that, according to the utilitarians, is the price we must pay.

According to Mill's argument, that way of thinking has everything upside down. The law does not exist to uphold majority morality against the individual, but to protect the individual against tyranny -- including the "tyranny of the majority." Of course, if the exercise of individual freedom threatens harm to others, it is legitimate to curtail it -- for in such circumstances one person's gain in freedom is another person's loss of it. But when there is no proof of harm to another, the law must protect the individual's right to act and speak as he chooses.

This principle has a profound significance: It is saying that the purpose of law is not to uphold the will of the majority, or to impose the will of the sovereign, but to protect the will of the individual. It is the legal expression of the "sovereignty of the individual." The problem lies in the concept of harm. How can I prove that one person's action does not harm another? How can I prove, for example, that other people are not harmed by my public criticism of their religious beliefs -- beliefs on which they depend for their peace of mind and emotional stability? How can I prove that consensual sex between two adults leaves the rest of us unaffected, when so much of life's meaning seems to rest on the assumption of shared sexual norms? These questions are as significant for us as they were for Mill; the difference is that radical Islam has now replaced Scottish puritanism as the enemy of liberal values.

Mill's defense of liberty, which was enunciated with great force and seeming clarity, soon followed the path taken by his defense of utilitarianism, and died the death of a thousand qualifications. "On Liberty" sees individual freedom as the aim of government, whose business is to reconcile one person's freedom with his neighbor's. "The Principles of Political Economy" by contrast, while pretending to be a popular exposition of Adam Smith, accords extensive powers of social engineering to the state, and develops a socialist vision of the economy, with a constitutional role for trade unions, and extensive provisions for social security and welfare. The book is, in fact, a concealed socialist tract. While "On Liberty" belongs to the 18th-century tradition that we know as classical liberalism, "Principles" is an example of liberalism in its more modern sense.

Mill's hostility to privilege, to landed property, and to inheritance of property had implications which he seemed unwilling or unable to work out. His argument that all property should be confiscated by the state on death, and redistributed according to its own greater wisdom, has the implication that the state, rather than the family, is to be treated as the basic unit of society -- the true arbiter of our destiny, and the thing to which everything is owed. The argument makes all property a temporary lease from the state, and also ensures that the state is the greatest spender, and the one least bound by the sense of responsibility to heirs and neighbors. It is, in short, a recipe for the disaster that we have seen in the communist and socialist systems, and it is a sign of Mill's failure of imagination that, unlike Smith, he did not foresee the likely results of his favored policies.

Taking "On Liberty" and "Principles" together we find, in fact, a premonition of much that conservatives object to in the modern liberal worldview. The "harm" doctrine of "On Liberty" has been used again and again to subvert those aspects of law which are founded not in policy but in our inherited sense of the sacred and the prohibited. Hence this doctrine has made it impossible for the law to protect the core institutions of society, namely marriage and the family, from the sexual predators. Meanwhile, the statist morality of "Principles" has flowed into the moral vacuum, so that the very same law that refuses to intervene to protect children from pornography will insist that every aspect of our lives be governed by regulations that put the state in charge.

Mill famously referred to the Conservative Party as "the stupider party," he being, from 1865, a member of Parliament in the Liberal interest. And no doubt the average Tory MP was no match for the brain that had conceived the "System of Logic" -- an enduring classic and Mill's greatest achievement. Yet Mill suffered from the same defect as his father. He never understood that wisdom is deeper and rarer than rational thought. He never understood that the intellect, which flies so easily to its conclusions, relies on something else for its premises. Those conservatives who upheld what Mill called "the despotism of custom" against the "experiments in living" advocated in "On Liberty" were not stupid simply because they recognized the limits of the human intellect. They were, on the contrary, aware that freedom and custom are mutually dependent, and that to free oneself from moral norms is to surrender to the state. For only the state can manage the ensuing disaster.

Mr. Scruton is author, most recently, of "Gentle Regrets: Thoughts from a Life" (Continuum, 2005).

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From: Sam Citron5/22/2006 11:14:17 AM
   of 15
 
W.H.O. Chief Dies After Surgery {NYT]
By LAWRENCE K. ALTMAN and JOHN O'NEIL

Dr. Lee Jong Wook, director general of the World Health Organization, died in Geneva this morning after undergoing emergency surgery for a blood clot in his brain on Saturday, the organization said in a statement.

He was 61 and had led the health organization since 2003.

His death was announced at the opening session of the annual meeting of the organization's 192 member countries in Geneva by Spain's minister of health, Elena Salgado, who was chairwoman of the session. Her voice trembling, Ms. Salgado praised Dr. Lee as "an exceptional person and an exceptional director-general," Reuters reported.

The organization announced that Dr. Anders Nordstrom, currently its assistant director general for general management, will serve as interim director-general.

Dr. Lee, 61, a South Korean, fell ill at a luncheon on Saturday in Geneva at the beginning of the weeklong meeting, called the World Health Assembly. He complained of a severe headache and later vomited, an official who was present said. Paramedics took him to the Cantonal Hospital in Geneva. Surgeons found that he had a blood clot on the brain known as a subdural hematoma and removed it.

Such clots often follow injuries to the head like those from a fall. But the W.H.O. said Dr. Lee had been in good health and was not known to have had any such injury. The clot also could have resulted from a bleeding artery in his brain.

Michael Leavitt, the secretary for Health and Human Services, who traveled with Dr. Lee in Asia last year, issued a statement today praising him for having offered "visionary leadership and a cooperative spirit."

A main issue for the World Health Assembly, which Dr. Lee had planned to address today, is to galvanize efforts to deal with an influenza pandemic and adopting a new set of regulations concerning international health.

Influenza experts say that a human pandemic of the disease will occur but that no one can predict when or where it will happen.

Of major concern is a threat posed by the A(H5N1) strain of the avian influenza virus. That strain has spread widely among birds from Asia to Europe and Africa since 1997, leading to the death or destruction of tens of millions of them.

While only a small number of people — 217 in 10 countries — have developed A(H5N1) avian influenza, the illness has been severe; 123 of the patients have died.

Experts are concerned that the avian strain could mutate or that human strains of influenza could combine with bird strains to create a new human virus that could cause a pandemic. So they are taking extra steps to investigate cases among people. For example, the W.H.O. is now assisting the Indonesian government in investigating five deaths from A(H5N1) avian influenza in one family. It is the largest such cluster of avian influenza deaths .

Dr. Lee, like many other public health leaders, repeatedly said that all heads of state should ensure that their countries develop a national pandemic preparation plan. In pursuing this goal, he met with many heads of state, including President Bush, President Jacques Chirac of France, and President Hu Jintao of China.

By most accounts Dr. Lee had a stormy course during his less than three years in office.

When he started the job, Dr. Lee pledged to help the world's poor. He championed an AIDS treatment program known as "3 by 5," which promised to make anti-retroviral therapy accessible to three million people by the end of 2005, most of them in poor countries. Although the effort fell far short of its goal, it helped change the way government leaders thought about making AIDS drugs available in poor countries. Dr. Lee urged governments and private organizations to make anti-H.I.V. drugs universally accessible by 2010.

Dr. Lee spent much of his career directing programs to eradicate polio and had hoped to achieve that goal while director general. But the goal remains elusive, largely because the disease spread from Nigeria to a number of other countries after officials in the northern province of Kano temporarily banned polio immunizations. Countries that had wiped out polio then had to conduct new large-scale immunization programs to stop spread of the virus.

Also, morale problems at W.H.O. headquarters led many staff members to participate in a one-day strike earlier this year, the first in the organization's 53-year history.

Dr. Lee's experience with the public-health ramifications of international events reached back to his early childhood. When he was 5 years old, during the Korean War, he, his mother and two brothers had to trek 250 miles through a bitterly cold winter to be reunited with his father.

"The first thing he did was take us to a bakery for cookies," Dr. Lee recalled during an interview at the time of his appointment to lead the W.H.O. "I cried."

His father and one brother went into politics, but Dr. Lee said that his mother pushed him toward medicine as a way to earn a steady living. After earning a medical degree from Seoul National University, he dropped out of a training program and enrolled at the University of Hawaii to study public health, out of a belief, he said, that he could do more good that way.

During that program, he traveled through Micronesia to treat leprosy patients and used the blood samples he collected to develop a faster leprosy test.

He earned a master's degree in public health, but never finished his preventive medicine residency, because in 1983 a medical officer who was moving to the W.H.O.'s headquarters convinced Dr. Lee to take the job he was leaving, which included working on leprosy in Fiji.

Dr. Lee said he considered it "just a job," but was hooked both by the fun of scuba diving there and the sense of accomplishment that came from working in the field. In 1986, he was promoted to work in the agency's regional office in Manila, and then in 1990 he moved to the Geneva headquarters.

When Dr. Lee was appointed director general, he became the first Korean to lead an international agency.

He is survived by his wife and one son, Tad, news services reported.

In the 2003 interview, Dr. Lee recounted Tad's reaction to the news of his promotion to director-general: "Dad, you may save the world, but I need a new car."

Dr. Lee, who was driving a Volvo with 180,000 miles on it, agreed.

When it came time for him to choose his official car as director-general, Dr. Lee requested a Toyota Prius, a gas-electric hybrid, to symbolize the need for environmental health and prevention.

nytimes.com 

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From: Sam Citron8/26/2006 6:51:00 PM
   of 15
 
Super Computer: Tech Guru Tackled Social Ills, Too
Control Data Founder Took A Non-Wall Street Approach [WSJ]
By DON CLARK and STEPHEN MILLER
August 26, 2006; Page A7

William C. Norris, Computing Innovator (1911-2006)

William C. Norris built computers that helped address some of the world's toughest scientific problems. He also used his company to take on social problems, an idea that inspired admirers but irritated Wall Street.

Mr. Norris founded Control Data Corp., whose massive machines in the 1960s were more powerful than those of mighty International Business Machines Corp. He also pioneered computer services in areas such as education decades before the Internet made that commonplace. The company employed 60,000 by 1984, and helped turn the Minneapolis/St. Paul area into a technology hub.

A Nebraska farm boy who lived through the Depression, Mr. Norris's first-hand knowledge of hardship helped shape his belief that Control Data should help people the government couldn't. He located plants in inner-city neighborhoods where unemployment was rife. He built training centers for teachers and engineers. Other ventures tried to help farmers, convicts and entrepreneurs.
[William C. Norris in 1965.]
William C. Norris in 1965.

"I never met a corporate executive with a broader range of insights into the deficiencies of our political economy," consumer activist Ralph Nader says of Mr. Norris, who died Aug. 21 at age 95.

The vision fit the spirit of the 1970s, when Control Data was growing briskly. By the mid-1980s, however, the company was beset by competition from Japan and other problems that led to the sale or closing of several businesses. The Control Data name would eventually die, though some of its computer services live on through Ceridian Corp., specializing in human-resources applications.

When his business faltered, Mr. Norris's social ventures came under stiff criticism from the financial community as a waste of time and money. "The external impact was extremely negative," recalls Robert Price, the longtime No. 2 man at Control Data who became CEO upon Mr. Norris's retirement in 1986.

Never a fan of Wall Street, Mr. Norris was unapologetic. "If people didn't scoff, I'd know immediately I was on the wrong track," he said in a 1980 interview, referring to criticism of a company-supported, small-scale farming venture.

Mr. Norris was educated in a one-room schoolhouse and later the University of Nebraska. He was introduced to calculating machines in World War II, helping the U.S. Navy decode enemy communications. In 1946, Mr. Norris and other veterans set up shop in St. Paul as Engineering Research Associates. In 1951, ERA was purchased by Remington-Rand Corp., whose Univac brand became synonymous with computers of the day. Sperry Corp. later purchased Remington-Rand.

After what he called "a bellyful of large companies," Mr. Norris left to form Control Data in 1957. The company began developing the fastest calculating machines on the market.

When IBM responded in part by promising better machines, Control Data challenged the tactic in a gutsy antitrust suit filed against IBM in 1968. Mr. Norris emerged the victor in a 1973 settlement. But Big Blue would be the winner in large commercial computers, while Control Data in the 1980s was relegated to a high-end niche.

Though Control Data is sometimes described as a "big-iron" dinosaur doomed by the advent of personal computers, Mr. Price notes that Mr. Norris anticipated such pressures and pushed the company into computer services. "He was way ahead of his time in understanding that computer hardware was going to become commoditized," Mr. Price says.

His ideas that generated the most headlines had a social or educational bent. Among them, Control Data Institutes, a network of vocational schools, was set up around the U.S. and other countries. That effort dovetailed with what he called his greatest contribution -- Plato, a computerized education system that began in 1963. Though never a money-maker for Mr. Norris, Plato is widely seen as one of the first online communities, where users could exchange messages and play games as well as learn.

After 29 years at Control Data, he founded the William C. Norris Institute, now at the University of St. Thomas in St. Paul, Minn., which operates a seed-capital fund focusing on socially beneficial products and services. Despite his technical innovations, Mr. Norris lived simply, eschewing even computers. He agreed to move from a modest St. Paul home only after insisting on energy-saving features, including a windmill to heat the swimming pool

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