Month: January 2023

Just About Everybody vs. Howard Hughes

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The Book of the Week is “Just About Everybody vs. Howard Hughes, The Inside Story of The TWA-Howard Hughes Trial” by David B. Tinnin, published in 1973.

In the 1930’s, Howard Hughes inherited his father’s oil-industry-equipment company, Toolco, which sold a unique, patented, lucrative drill. By the early 1950’s, Hughes had become a pilot passionate about acquiring jets (whose engines had technology that was obsolescing pistons) for his airline, TWA. He was an alpha male whose desire for control of his company led to decades of complex litigation involving age-old economic and political issues.

As American society became ever more capitalistic in the Postwar Era, businessmen hired more and more attorneys to wield more and more power and influence. They sought to change the tax laws to make more and more money.

Hughes was a victim of his own success in that he was using highly leveraged, deficit financing to purchase the new jets through his Toolco. Into the 1950’s, individuals (rather than their companies or employers) were the ones responsible for debts if they needed to borrow money for their businesses. This economic condition has come full circle with tech startups.

Hughes borrowed from banks and insurance companies, but by the late 1950’s, his debt was so high, they refused to give him special treatment. He used dirty tricks (which arguably weren’t illegal but were unethical, at best) to order jets from a few different suppliers.

Hughes’ incestuous business transactions generated an escalation of commitment among various parties, who were averse to losing even more money if they withdrew from their ongoing deals with him. Need it be said, there is nothing new under the son (or sun– either one). In the early 1960’s, his creditors terminated his borrowing privileges and created a voting trust that took control of TWA. Neither side wanted to see TWA go bankrupt. There were, of course, other wrenches in the works, which are too numerous to mention here.

The orgy of litigation resulting from Hughes’ business activities triggered a very controversial legal and economic issue. Hughes owned 78.23% of the voting stock of TWA, which was financially affiliated with his Toolco. At that time, TWA shares were not owned by the general public. His side argued that he should be allowed to control his companies as he saw fit, because he had a controlling interest in them. On the other hand, he really didn’t own them– his creditors did!

Besides that, if TWA went belly-up, there would be far-reaching economic consequences for many stakeholders. All employees of TWA would lose their jobs, competing airlines would benefit financially, contractors supplying jets and their parts to TWA would lose a customer, Hughes’ lenders would lose megabucks, etc., etc., etc.

According to the book (which appeared to be credible although it lacked Notes, Sources, References, and Bibliography), in June 1961, the big lawsuit initially launched in federal court in the Southern District of New York against Hughes was named TWA v. Howard Hughes. TWA charged Hughes with making special deals with third parties that led to financial harm for TWA. He tried to keep competing airlines from buying jets he wanted for TWA, through monopolistic practices.

BUT, due to disastrous losses (from a downturn in air travel that prompted proposals of various airline mergers, and his tax-evasion tricks), Hughes chose to cancel a portion of jet orders for TWA. Under his crushing debt load, he couldn’t afford to pay for all of his purchases. So the airline couldn’t stay competitive in the commercial airline industry. Other airlines were purchasing jets sooner at lower cost. Hughes’ series of attorneys through the years, of course used all manner of shenanigans (through: filing a blizzard of documents with creative legal arguments, counter-suing and appealing rulings) to delay the case.

One last-minute development that aided Hughes’ attorney before Hughes would be charged with contempt of court yet again, was a curious January 1963 Supreme Court ruling regarding jurisdiction in connection with a monopolistic entity. There was a little federal agency called the Civil Aeronautics Board (CAB), that had been regulating the airlines. The attorney repeatedly tried to get the case against Hughes dismissed– by arguing that CAB, rather than a federal court, should have been trying Hughes’ case.

Read the book to learn every last detail of this suspenseful story that spawned reams of tabloid fodder, but also greatly impacted the legal, economic and tax cultures of corporate America.

Behind the Candelabra

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The Book of the Week is “Behind the Candelabra, My Life With Liberace” by Scott Thorson with Alex Thorleifson, published in 1988.

Born in Milwaukee, Wisconsin in May 1919, the pianist who became known as Liberace (he used his family’s last name as his stage name) had three younger siblings. The father abandoned the family when he was an adolescent. However, Liberace was his mother’s favorite. Upon seeing that he had piano-playing talent, she had him practicing all the time, instead of socializing with his peers. She also practiced spousification. He began to get paid for his musicianship at fourteen, playing with a band in saloons.

Piano concerts were only the setting for Liberace’s performances. His witty verbal jousts, audience participation, makeup, ten or more changes of glittery costumes, jewelry galore, and flamboyant props and sets– were par for the course.

According to the book (which appeared to be credible although it lacked an extensive list of detailed sources, and an index), Liberace was very emotionally needy. Once he became rich and developed Peter Pan syndrome, he felt the need to flaunt his high-on-the-hog lifestyle. As an adult, he became a father figure to a series of young males one at a time (but also had an army of servants), sharing his wealth and material possessions with them. However, he was the controller of the relationships, and would break up with them when they expressed too much desire for independence.

At the dawn of his twenties, Scott Thorson met Liberace and became his personal assistant in the summer of 1977. Thorson had suffered through a difficult childhood in a series of foster homes. He soon became Liberace’s surrogate son, and learned of the pianist’s excesses. He enjoyed his new role at first, as his interests meshed with his boss’s. They cared for pet dogs and horses, shopped for and wore elaborate clothing, ate sumptuous meals, met other celebrities, and traveled in style to go on tour.

Their first Christmas together, Thorson was tasked with purchasing holiday merchandise. He wrote, “That year, we had eighteen huge Christmas trees [in Liberace’s mansions in Las Vegas and Palm Springs CA, at a cost of $25,000], more than 350 red and white poinsettias, table decorations, greenery, wreaths– enough candles, lights, and tinsel to stock a department store.”

Read the book to learn of Thorson’s fate: when Liberace asked him to make a serious physical sacrifice; and how Thorson handled the responsibilities and stresses of living with a celebrity such as Liberace– with its many kinds of orgies, including those of litigation in the end.

Our House – BONUS POST

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Here’s a little ditty that summarizes events of the past week or so in the United States House of Representatives.

OUR HOUSE

sung to the tune of “Our House” with apologies to “Madness” (the band).

McCarthy sold-his-SOUL, feeling pressed.

Reps are tired, they need a rest.

The committees are plotting beHIND closed doors.

The Caucus’s power took a LEAP. [ah-ah-ah]

Biden holds an olive branch, his legacy is now.

Our House, in the middle of the heat.

Our House, in the middle of the–

The Caucus was uncowed.

Males are always power-struggling and they’re usually quite proud.

The Speaker went-fifTEEN-rounds.

Only concessions slowed him down but defeat was not allowed.

Our House, in the middle of the heat.
Our House, in the middle of the–

Our House, in the middle of the heat.

Our House [Tabloids tell us that the radicals took hold of it.]

in the middle of the–

McCarthy rejected-the-Jan.-6 panel’s work.

His base didn’t know, whom to desert.

Then he wanted to probe the probers.

See him long-to-stay where Trump’s YOKE is. [ah ah ah]

Pelosi’s the one they’re going to miss in lots of ways.

Our House, in the middle of the heat.
Our House, in the middle of the–

[I remember way back when, men had honor

and the world didn’t have so very MANY spies.

No more PRIvate lives.

Such a FREE time.

And I remember how we’d live, simply face to face,

used our brains.

Software wouldn’t come between us.

No Tweeters.]

McCarthy sold-his-SOUL, feeling pressed.
Reps are tired, they need a rest.
The committees are plotting beHIND closed doors.
The Caucus’s power took a LEAP. [ah-ah-ah]
Biden holds an olive branch, his legacy is now.

Our House, in the middle of the heat.

Our House, in the middle of the heat.

Our House, in the middle of the heat.

Our House, in the middle of the–

Our House, we need IT for demo-cracy.

Our House, in the middle of the heat.

Our House, that is where some people sleep.

Our House…

Black Box Thinking

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The Book of the Week is “Black Box Thinking, Why Most People Never Learn From Their Mistakes– But Some Do” by Matthew Syed, published in 2015. This volume attempted to answer the question: “How does failure-denial become so deeply entrenched in human minds and systems?”

The author described two ways of thinking:

1. Some people believe their abilities are fixed, so they won’t improve with practice. They have fear of failure, and make excuses and / or blame others for their failures.

2. Other people believe they can get better with practice, and they are honest about admitting they have made errors. They learn from them. Success is achieved only through trial and error, hard work and persistence.

Number 1 above is also described in the following quote from Bertrand Russell: “There is something feeble and a little contemptible about a man who cannot face the perils of life without the help of comfortable myths. Almost inevitably some part of him is aware that they are myths and that he believes them only because they are comforting. But he dare not face this thought! Moreover, since he is aware, however dimly, that his opinions are not rational, he becomes furious when they are disputed.” Yet another way of putting it is “hubris syndrome.”

Two of America’s recent presidents– George W. Bush and Donald Trump– were this kind of thinker. According to the author’s thesis, they succeeded against the odds (if success is defined as getting elected president), considering that they were blind to their own character flaws.

BUT– their common beginnings saw them through: They both began with the special advantages of inheriting money, mentors, lawyers, and valuable career and political contacts. They proceeded to fail upwards until they reached their peak “Peter principle” level, kind of like the joke: How do you make a small fortune in Israel? Answer: Come with a large one.

The author drew parallels between the topic-areas of aviation and healthcare delivery. These involve life-and-death scenarios when things go extremely wrong. However, that is where the similarities stop. People who have shaped the evolution of aviation have built up a knowledge-base that has served to produce lower and lower death tolls when catastrophes have occurred; powerful, influential people working in healthcare have been stubbornly resistant to adopting measures that would result in a drastic reduction in unnecessary deaths.

The author cited real-life examples from Great Britain and the United States. But there are other major reasons why his comparison is mostly invalid. These involve lawsuits, unions, government regulations and the political climate at the time of the disasters, and the following:

Obviously, workers in aviation have more of an incentive to improve safety, because in a disaster, many more people might die all at once in a plane crash, compared to the one patient on an operating table or examination table. Even if members of the flight crew survive a disaster, their careers are likely over. Even when doctors are at fault, they usually continue their careers.

The author discussed the pros and cons of just-culture versus blame-culture. He described the latter thusly: “It may be intellectually satisfying to have a culprit, someone to hang their disaster on. And it certainly makes life simple.”

The author recounted how a public-relations campaign can fool even intelligent people into believing a particular method of crime-prevention among young people, works wonders. The only way to debunk such a myth is through numerous Randomized Control Trials.

Read the book to learn about additional concepts surrounding psychological self-deceptions that humans employ in order to avoid admitting failures: cognitive dissonance, narrative fallacy, top-down versus bottom-up product development, various biases, and others.