Category: Business

Red Carpet

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The Book of the Week is “Red Carpet, Hollywood, China, and the Global Battle for Cultural Supremacy” by Erich Schwartzel, published in 2022. In this hodgepodge of a volume, the author described the interactions between the United States and China in connection with their movie and television industries, beginning in the 1990’s.

America seeks to profit in everything it does.

The Chinese government’s number one goal is to boost its national pride when selling video entertainment to end-users. The government therefore keeps a tight rein on the optics of its products– limits the stories of its public-private partnership’s shows to:

  • glorifying itself and its Communist Party history;
  • recounting its victimization at the hands of evil, Western powers and Japan with regard to militarism and trade in the 19th century;
  • glorifying superheroes who convey Communist ideology.

The Chinese government gets very offended when even one movie-line or one tweet implies that Tibet or Taiwan are not part of China. It censors story-characters who challenge authority, buck established order, or shake things up. It censors disparagement of China, adult themes of vice, religion, gruesome violence, ghosts and gays. China financially punishes the perpetrators– the entertainment companies. Because it can.

Another aspect of China’s video culture is rampant pirating of Western entertainment. Further, deals made with foreign countries to screen shows in China, are always financially superior for China. Contrarily, in various ways, China will curtail revenues for all parties if it sees that the foreign entities’ shows are too influential with Chinese viewers.

November 1994 saw the first American movies (made by Warner Brothers) shown in China. Even though in the next quarter century, foreign videos shown in China became China-fied, only Chinese people watch movies made in China. Americans aren’t watching movies made in China.

Beginning around 2014, China’s dictator Xi began to punish Chinse entertainment-industry dissidents. Between 2017 and 2020, America had 17 of the fifty highest-grossing movies of all time. China had 27.

China has begun to export its movies and TV shows to Kenya at a deep discount in order to push its ideology. But viewers enjoy American shows better. The younger generation yearns for the consumer goods they see on TV. Interestingly, Disney was one of the few American content-providers that didn’t portray Africa as a “lawless land of disease and despots.”

Read the book to learn many more details of how Hollywood became experienced at dealing with China in seeking to make money, while China played Hollywood, and how China is spreading its gospel to the African continent with the goal of world domination.

Let There Be Water

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The Book of the Week is “Let There Be Water, Israel’s Solution for a Water-Starved World” by Seth M. Siegel, published in 2015. For this redundant, wordy volume, the author obviously simply slapped together all his past articles on the subject, without regard to organizing them. His main message was: Hire Israel to provide expertise on water management– to save time, energy, and the earth!

Anyway, in Israel, all water ownership and usage is controlled by the government. Its socialist philosophy is: do the greatest good for the greatest number. Water is an essential resource for humans. Israel’s tiny geography and population allow its government to more or less dictate policies that minimize damage done by selfish, greedy people who hoard essential resources– much more easily than can a nation like the U.S.

In 1937, Levi Eshkol, Simcha Blass and their cronies co-founded and launched a water company called Mekorot. It became a capitalist entity in bed with Israel’s government, but profit can be a good motivator for spurring innovation, and improving people’s lives. Financial conflicts of interest can be forgiven in this case, as the water-entrepreneurs made significant positive contributions to the physical and economic health of the young nation, developing the best water-distribution method for farming.

Conservative Republican Americans would actually scream SOCIALIST!!! at such a system. It works in Israel. As is well known, such a system does not work in the United States because it encourages citizens to start entrepreneurial ventures via financial assistance while also taxing the super-rich on the back-end for having taken advantage of existing infrastructure and front-end incentives. In America, there is little to no taxing on the back-end for the super-rich.

Anyway, in 1949, Israel’s first prime minister, David Ben-Gurion struck a deal with Germany for the latter to pay WWII reparations for lost and stolen property of the Jews. Those funds, and donations by American Jews, through the next few decades, were spent on constructing water infrastructure, such as fault-tolerant water pipelines, environmentally friendly waterways, and waterfront tourist-attractions.

In the 1950’s, the Knesset began passing laws regulating the country’s water system. Israel’s geography, topography and meteorology are diverse from north to south, and present challenging desert-related conditions, so it’s complicated and expensive to deliver safe, reliable, available water to its citizens. The water experts found that recycling sewage by filtering it three different times and ways, made it potable. In 2008, the Israeli government began to make its people pay for the real cost of delivering their water.

Read the book to learn much more about Israel’s water expertise, and how it is changing the world.

No Way But to Fight

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The Book of the Week is “No Way But to Fight, George Foreman and the Business of Boxing” by Andrew R.M. Smith, published in 2020.

Born in 1949 in the Houston, Texas area, Foreman grew up in poverty in a large family. His future looked dim, as his schooling had been scant and his leisure activity had consisted of mugging people on the streets in the middle of the night.

Beginning in the mid-1960’s, president LBJ’s federal job-training program, called the Job Corps, arguably saved Foreman’s life. Various mentors who had acquired diverse life experiences- military veterans, counselors, coaches and teachers– supervised about two thousand troubled teens. Foreman learned about boxing, and won the first tournament he fought, in January 1967.

Foreman’s coach got him excused from the military draft for an undisclosed reason. As is well known, rival boxer Muhammad Ali became religious and resisted the draft. Through the decades, compulsory military service hindered plenty of careers of professional athletes, but they (Ty Cobb, Joe DiMaggio, Joe Louis and Roger Staubach, to name four) didn’t make a public issue of it. The government wanted to punish Ali on behalf of those athletes– regardless of his ethnicity– because it was unfair to them, that Ali could continue to develop his career while their lives were disrupted or put at risk.

Ali obviously turned this into a civil rights issue, but other people considered him to be “cheating” as he was getting an unfair advantage over his competition. It is interesting to see how, through the decades, the conversation has shifted on how some Americans define “cheating” in professional sports.

Performance-enhancing drugs (regulated in international competitions but not terribly strictly in American professional sports) have quietly disappeared from the discussion in the United States, as a million conspirators have pushed gender-issues to the forefront– as the next form of cheating. That just shows how easily human beings can be brainwashed by propaganda!

Anyway, yet another turning point in Foreman’s career, occurred at the dawn of the 1970’s, when he met Dick Sadler. The boxing promoter was a rare bird– did business on a handshake and wasn’t as greedy as his competition.

Boxing through the 1970’s was a complicated business, considering all the stakeholders involved: the fighters themselves, their entourages, event-venues, event-broadcasting outlets, the various professional groups that organized the matches, and the political entities that regulated and taxed the aforementioned.

In the early years of his career as an amateur, Foreman was criticized for choosing to fight easy opponents. In March 1974, he was also labeled unpatriotic for scheduling a match outside the United States (in Venezuela), even after his tax-avoidance and financial-related divorce troubles had ended. The international media stories arising from that fight, smacked of the poor diplomatic relationship between America and Venezuela (for oil-related reasons).

Read the book to learn much more about the boxers of Foreman’s generation who began their careers in the 1960’s, the history of the industry through the 1990’s, and Foreman’s careers.

No Better Time

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The Book of the Week is “No Better Time– The Brief, Remarkable Life of Danny Lewin, the Genius Who Transformed the Internet” by Molly Knight Raskin, published in 2013. This short, slightly sloppily edited volume whose title exaggerates, described the brief life of a dot-com startup genius.

Danny Lewin was born in May 1970 in a suburb of Denver, Colorado. His family moved to Israel when he was fourteen. He enlisted in the Israel Defense Forces, and then he moved back to the United States to attend school at MIT.

While in school, with a friend, Lewin helped develop a technological innovation within the big-picture innovation of the whole Internet. Initially, his dot-com business, named Akamai Technologies, provided the service of preventing of the crashing of the browser when: a video went viral or a website got overwhelmed with traffic, or a denial-of-service attack was launched against a website. Through algorithms, obviously, eventually, computer scientists discovered the required optimal number of servers communicating among themselves to maximize computing power to minimize latency and downtime.

In the second half of the 1990’s, worldwide usage of the Internet, a decentralized network of potentially infinite networks, was in its infancy. This meant, for ordinary users, downloading of data was extremely slow. Impatience was growing in leaps and bounds as time-saving devices (like office software) were, too; resulting in “irrational exuberance” over securities sold to the public that funded dot-com startups. The likely reason Akamai still exists today while so many other tech startups failed, is that there was an actual, valuable service behind it!

By spring 2000, after receiving ginormous funding from its IPO, Akamai’s customers’ servers collectively numbered more than 2,750 in more than one hundred fifty networks in forty-five nations. At the book’s writing, Akamai controlled between fifteen and thirty percent of the world’s Internet traffic.

Read the book to learn much more about Lewin, the people who helped him, and his startup.

Tangled Vines

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The Book of the Week is “Tangled Vines, Greed, Murder, Obsession, and an Arsonist in the Vineyards of California” by Frances Dinklespiel, published in 2015. The moral of this book’s main story is “Lawsuits followed and winemakers like Viader made mental notes never to be cavalier about the disposition of fire-damaged wine.”

According to the author, as of 2013, Americans drank the largest quantity of wine, 13% of all the wine of all the countries in the world.

In October 2005, a majorly evil crime was committed at the Wines Central warehouse on Mare Island in Vallejo. An assistant U.S. attorney for the Eastern district of California– an expert in wine fraud and arson, and an agent from the Bureau of Alcohol, Tobacco, Firearms and Explosives assessed the damage and investigated the site. The latter used an acceleration-detection canine, also called an arson dog.

The perpetrator committed: mail fraud (for shipping wine across state lines under a false name), interstate transfer of stolen property (because it wasn’t his wine to sell), arson, and tax evasion.

Fire destroyed millions upon millions of dollars’ worth of wine (stored in the warehouse) of mostly mom-and-pop wineries. As is usual in such instances, insurance claims of winemakers whose wine was covered, were denied, because the insurers contended that the wine was “in transit.”

In the single-digit 2000’s, Bill Koch of Koch family fame, didn’t spare a dime in finding out how he had become the victim of wine fraud. He employed investigators in various fields: ex-FBI agents, ex-Sotheby’s workers, a glass historian, and experts in cork and adhesives and labels. He sued the auction house and original seller of the wine.

Read the book to learn about the kinds of people who are passionate about making and selling wine, how they became victims of one especially bad actor, and a few other incidents in the life of the California wine industry.

Character & Characters / Retail Gangster

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The first Book of the Week is “Character & Characters, the Spirit of Alaska Airlines” by Robert J. Serling, published in 2008.

Alaska Airlines (AKA) came into existence in the mid-1940’s with the buyout of Star Air Service. It faced stiff competition from Northwest Airlines, and Pan American– which was already monster-sized from: its contract with the federal government to deliver the U.S. mails, and exchanging many political favors.

Mostly, AKA transported passengers between the Pacific Northwest and Alaska. In early 1949, it completed a dangerous mission, flying about 140 Jews from Yemen to the airport in Tel Aviv, while an Arab bomb could have hit the plane anytime.

In the 1950’s, top executive Charlie Willis had such passion for and loyalty and dedication to AKA, that he borrowed $100,000 using his personal house as collateral, in order to restore the pilot-pension-fund shortfall, to keep his employer from going out of business. Beginning at the dawn of the 1960’s, he enabled his second-in-command-executive to engage in deficit spending. They broke the bank to do promotional gimmicks.

In the back of its model CONVAIR 880, AKA installed a stand-up beer bar, even though it replaced eight passenger seats. AKA generated goodwill by throwing parties it couldn’t afford for industry players, such as its own employees and trade associations. In the late 1960’s, it bought hotels and a ski resort. AKA was one of the very first airlines to provide in-flight movies and music. So it hovered near bankruptcy, repeatedly unable to meet its employee payroll. For years.

Commercial airlines, initially transporting wealthy passengers, employed stewardesses in sexy uniforms– with no or minimal training, and offered alcoholic beverages included with the airfare. With evolution came the organization of labor– of pilots, flight crews and ground crews. Alaska’s bush pilots who had gotten in on aviation’s ground floor, had become disenchanted with the changing times. Bob Ellis sold his tiny airline in Alaska because he was no longer having fun, was emotionally exhausted from the government’s imposition of regulations, and didn’t understand the need for union labor. He had treated his employees well.

The Civil Aeronautics Board, one of the government’s regulatory bodies, was soon to stop subsidizing the (small, financially struggling) regional airlines (including AKA) in Alaska. The consolidation of the industry in the 1960’s meant no more floatplanes, biplanes, and single-engine monoplanes. These were replaced with DC-3’s and other faster, technologically superior aircraft.

Competing airlines were growing in size, complexity, and needed economies-of-scale and scope. Bosses couldn’t afford to pay for their employees’ expensive personal problems as though they were in a small business anymore. There was backlash by the workers against this vanishing era. They no longer felt like a family.

In summer 1970, AKA’s Willis (rumored to be an alcoholic) was able to get a new air route: to the U.S.S.R. Ironically, AKA had to lease a Pan Am 707 in order to do it. Willis became a drinking buddy to his Aeroflot counterparts. The passengers, who flew to Siberia, consisted mostly of Native Americans from Alaska visiting family, missionaries, and businessmen. They were treated to flatware made of gold, caviar in their Caesar salads, wine, and Russian samovars. The flight attendants dressed in Cossacks’ attire, with bear fur hats. Unsurprisingly, the flights proved insufficiently profitable over the course of three years.

AKA suffered less disastrous financial losses when the oil industry in Alaska kicked into high gear, in the late 1960’s. Oil-pipeline construction around Prudhoe Bay in the North Slope area became all the rage. From the Seattle-Tacoma airport, the airline’s Hercules’ C-130 planes transferred cargo, including hazardous materials that could accidentally cause a lot of wrongful deaths and property damage: 25,000 pounds of dynamite, heating and fuel oil and big, heavy drilling rigs for ground vehicles, and heaters.

In the early 1970’s, many pipeline workers liked hunting, but they got drunk before they flew home. AKA allowed rifles on their planes, so they hired the equivalent of bouncers who served as ground-crew screeners, and had a locked-up special gun-rack section in the front of the plane.

Read the book to learn a wealth of additional details on Alaska Airlines’ role in the development of aviation, people, power struggles, technologies, and the tenor of its times up until the book’s writing.

The second Book of the Week is “Retail Gangster, the Insane, Real-Life Story of CRAZY EDDIE” by Gary Weiss, published in 2020.

Currently fading from Americans’ memory, is “Crazy Eddie.” Launched in the mid-1970’s, it was a retail chain of electronics stores in the northeastern United States. The company became known for a spokesman who flooded all kinds of advertising media with emotionally-charged screaming, that Crazy Eddie’s prices were insane. The repetitive repetition of this singular message worked. Eddie projected an image of success that fed on itself.

However, from the start, the store’s top executive– Eddie Antar– committed financial crimes. He had selfish, greedy intent, unlike the aforementioned Alaska Airlines executives, who were merely big spenders out of unbridled optimism and honest ineptitude.

Starting in 1984 when the company sold shares to the public, Eddie and his key employees (mostly his relatives) engaged in securities fraud. They had ongoing, frantic bursts of activity in which they: “…stuffed cash in the ceiling, stole store sales-taxes, [plus, they falsified inventory records] and defrauded insurance companies without a second thought. They did not expect to be caught, and if the Antars had any doubt on that score, they had only to look to City Hall for inspiration.” New York City’s government had committed exactly the same kinds of accounting fraud for years and years, beginning in the 1960’s. As the behavioral-economics cliche goes, “The fish rots from the head down.”

By 1987, Crazy Eddie had 2,250 workers in 32 locations from Philadelphia to New England. Read the book to learn a slew of details on the fates of Eddie, his families, and his businesses.

Life in the Trash Lane

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The Book of the Week is “Life in the Trash Lane, A Sports Agent’s True Story” by Mel Levine, published in 1993. This sloppily edited volume described a bygone era in terms of the financial aspects of “amateur” sports in America. Only “professional” athletes could receive compensation in the form of money or gifts from work-related people and entities. College players were considered amateurs.

The author began a career as a tax attorney and business investor, but also became an agent for college football players on their way to the pros. He offered his services as an agent, CPA, lawyer, and financial planner. Initially, representing big-name athletes boosted his ego. The author hired various scouts called “bird dogs” who would help him acquire clients who had barely started college but were perceived as talented players. On the surface, sports agency looked lucrative, but it was actually a cutthroat, sleazy business.

The convention in the late 1980’s was for agents to advance expenses to the professional hopefuls, and then, if the players made the pros, the agent was paid about 5% of the athlete’s earnings. The author paid for their cars, insurance, housing, gifts for their significant others, legal fees, etc. (a clear NCAA rule violation). The author continued to run afoul of the strict NCAA rules, but he rationalized that all of the other agents were doing so, too, and he needed to stay competitive. Many times, he was almost busted.

The author was suckered into paying big bucks to numerous players he represented, but they never paid him even in cases when they made the pros. The players owed him thousands and thousands of dollars, but he developed a version of Stockholm syndrome– acting as a father figure to a few of them, and remained fiercely loyal because he felt an escalation of commitment.

In May 1986, one of the author’s clients had an accident in the expensive car paid for by the author. Two major Miami newspapers’ stories on this prompted the question of how the athlete could afford such a car. The car was likely provided by his agent, or his college– the University of Miami. If so, the NCAA violation would end the player’s career before it started, and the scandal would ruin the reputations of the agent, the school, and many others.

The author cooked up a scheme to get a slew of parties out of trouble. He shredded all the paper contracts of his rule-violating clients, and claimed he was running a car-leasing operation; the athletes’ parents were leasing the cars for them [like everyone really believed that (!)].

The author told of another client who was nothing but a boondoggle, but the author stuck by him for years, anyway. By 1987, “He was damaged goods for a [National Football League] team to expend a valuable draft choice on a kid with a bad ankle, drug problems, legal problems, and a dishonorable discharge from BYU was more than any of them would bear.”

As can be imagined, the sports agency business will keep commercial litigators in business forever, as its seamy underbelly consists of an orgy of litigation. The author dismissed yet another client’s transgressions: “At worst, he blew up a Porsche (quite by accident), got arrested in New Jersey for carrying a concealed weapon and unfortunately got into a fight or two. No big deal.”

Read the book to learn about a slew of other details of the conduct of sports agents and their clients of the late 1980’s.

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.