There is something about this idea that is left unsaid, and I think it has something to do with the first law of thermodynamics.  That is the one about energy not being created or destroyed, just moved around.  Although new industries are certainly created in a great shift brought about by the destruction of distance or time, there are also a great deal of industries and workers who bite the dust (hey, whatever happened to all those blacksmiths?)  Equally important is that the more meteoric the rise of some technological industry, the more destructive is its wake.

The technological boom of the last couple of decades is still on the go, and I think that it is having a large effect on employment.  There needs to be some structural shift in education or job training to catch people up to technology.  Many of the top jobs in terms of growth are related to the IT field, but as a component of student education I am not sure that it has grown in importance.  For example, many undergrad student are required to take one IT class as part of general education.  In addition, technology has been introduced only slowly in other classes.  In contrast, for most professional jobs you sit at a computer ALL DAY.

In his article, McCusker points out the reasons that Antwerp succeeded as a haven for commerce not by keeping information secret, but instead by making it increasingly more public.  To a degree the secrets of IT need to be opened up to much broader audience.  IT impacts every industry, every firm, and every employee.  In my own research into financial planning as a business, the profusion of technology is given some credit for building the industry, but if one looks at larger picture it should have a much greater presence.  This is especially true with regard to the availability of information to the common investor, the ability of the planner to build more accurate models and to receive more current information on trades or prices, and the reduction in manual calculation and file keeping.

There are several relationships like this one that are passed around amongst market participants.  Sell in May and go away.  If a team from the old NFC wins the Superbowl, it will be a bad year for the market.  If a Democrat is elected President the remainder of the year will be bad for the market.  The only thing more silly than some of these is the fact that they persist.  Not in the mainstream of financial education, but on the periphery.  It is all part of the strange institution that is the stock market.

There are a host of industries, certifications, and schools dedicated toward producing smarter and wiser market prognosticators.  Professionals try to move away from emotional responses toward more rational and educated decisions with respect to market action.  Despite this growth much silliness remains.  What could be more fun than buying a stock and doubling your money?  You don’t have to do anything.  The stock market is not like gambling.

The layman investor may be limited in personal knowledge of financial statements, ratios such as P/E, technical terms such as support and resistance, or to measures of risk like beta and standard deviation.  However, even the most seasoned investor and financial wizard can and will make poor stock investments.  Meanwhile a casual investor who chooses to purchase a stock on some whimsical connection such as the ticker matching his initials could very well end up with a great rate of return.  The stock market is like gambling.

Perhaps part of the dilemma is the fact that when the market falls both professionals and civilians alike are caught with their pants down.  This does not give credit to the professionals or to having an increased knowledge of the markets.  Galbraith gives credit to this phenomenon well, as he points out the pessimistic voices leading up to the Crash including economists and politicians such as Hoover.  He also points out the largely negative reaction to these voices of reason by the larger investing public.

The institutional opinion on the market seems to be that in the long run a buy and hold strategy will net investors a greater gain than any other investment.  I helped prove this in an article at my previous job.  I made a model portfolio from the monthly data of indices of various asset classes (US stock heavy) and displayed that over rolling 3, 5, and 10 year periods this portfolio would return between 7-10%.  Our models only went back to 1972 however, so once in a lifetime market crashes did not factor in here.  Another troubling aspect of this research was the itching feeling that the past decade was not so good.  Unless the market (as viewed by the S&P) doubles in the next month or so the 2000′s will mark the first decade that the market actually yielded a negative return since the before the 1950′s.

This is not to say that the stock market is a wash, and I do think that there is a benefit to investing with some education as well as detachment.  The media in some ways is an enemy to the investor, as negative stories and hype are promoted while probably “boring” stories with details of real numbers or advocating a low-risk, modest return strategy does not make good news.  A story I would like to see would be a historical piece the next time Florida real estate prices sky-rocket pointing out just what happened last time.

Dreiser is not totally explicit about the immorality, or amorality of Cowperwood.  In fact, it is clear that Cowperwood in many ways may be a great addition to society, as his financial genius helps aid the flow of money and credit about Philadelphia as well as adds to the capitalization of the street cars.  You just would not necessarily trust him as a close friend or confidant.  Dreiser frequently compares Cowperwood to a spider and his work like a spider’s web.

“Like a spider in a spangled net, every thread of which he knew, had laid, had tested, he had surrounded and entangled himself in a splendid, glittering network of connections, and he was watching all the details” (156).

Spiders typically evoke unpleasant feelings, but in reality they are a necessary component of the natural world.  In many ways they clean up and hold back an otherwise miserable population of insects.  It may be better to see a spider in your house than a cockroach for instance.  You would throw the spider out just the same though.

An interesting tangle in this work is the challenge to reality, or to the reader’s moral judgement.  I do not want to agree with Cowperwood’s belief that people are divided into strong or weak.  Dreiser introduces this theme from the beginning again with an animal metaphor as young Cowperwood watches a lobster and a squid battle it out over a series of days.  Eventually the lobster wins and devours the squid.  As a reader this does not appeal to ideas of immutable morality and instead looks more like gritty realism.  Cowperwood is strong, so he walks into the courtroom a lobster who will win, while the city treasurer, Stener, is a weak squid, and has lost his case before testifying. 

Dreiser did a lot of detailing the atmosphere of the period, but the characters are not as bound by time.  I have known Cowperwoods.  They rationalize decisions in the very same manner today as he would have over a hundred years ago.  Today’s Cowperwood would use contemporary language and perhaps display a distinct attitude more in keeping with today’s culture, but certain underlying themes remain.

For example the strong versus weak language.  At the office I worked for employees were encouraged to go to the gym and memberships and trainers were even paid for.  In fact the longer an employee worked at the firm the better shape he or she could be expected to be in.  Management threw treats left in the kitchen in the trash and if someone ordered something deemed unhealthy for lunch it would be commented on.  New people were often described as scrawny or in need of gym time, diet, etc.  This is only a small slice of this strong versus weak theme in finance.

The other similarity that struck me is that of agency.  Cowperwood, like some people in finance, carry the entire world on their shoulders so to speak.  They are responsible for every success, and failure is out of the question.  To fail is directly tied to individual effort and would undermine everything.  So failures must be attributed elsewhere.  The volatility of the market takes some of this away.  Cowperwood blames others, such as Stener:  “The feebleness of the man; the weakness of the man; the pass to which his cowardice had brought them both” (339).  Stener did not make any decisions more or less guilty than Cowperwood, but what he did not do was continue to prop up the scheme with an increased loan to Cowperwood’s firm during the panic to avoid collapse.  Cowperwood is mad his system came down, or that he has been caught.  He has no consideration that he has done anything wrong.

I have no comparable memories of anyone engaging in activity such as this, but it does remind me of some of the language heard while at this firm.  Someone was fired about every three months.  Any time this happened people (like the people doing the firing) would say things like “it is what it is.”  What the heck does that mean?  You fired him!  He needed to be fired!  Why take the agency out of this transaction at all?  What may have been seen as a source of strength at the point of impact in Cowperwood’s time has to be mitigated today.  Later the organization can speak about shedding inefficiencies and the like.

I regret having not read The Financier years ago.  It is terribly interesting, and an insight into the characters of finance.

In many instances corporations project the exact same images and imagery used by corporations of old to illicit feelings of nostalgia, permanence, or neighborliness.  Images of factories with billowing smoke stacks would certainly not work today given the increased environmental sensitivity, but companies still use images of office buildings.  New York Life uses a mix of  both its headquarters and existing “for generations.”

Other companies rely on updated cinematic techniques or computer assisted technology to create modern commercials, but the core message is exactly the same.  Look at this Dow “Human Element” commercial.  What does this mean?  How is Dow trying to link itself to chemistry, or humanity, or what?  Yet this type of commercial is similar to those advertisements featuring Achievement or sheep on pages 94-5, or that of the little boys on page 226.  It is not about selling product, it is about efforts to “humanize its image” (226).  If modern society is somehow less naive, then why would corporations continue to the same tactics it did in the past?

Chandler was correct that management provided a direction for the future of the market, and probably still do.  Scranton, in Endless Novelty demonstrated that the mega-corporations, while important, were not necessarily the majority of business post-Civil War to the 1920′s.  Scranton did well to identify specific manufacturers and to define four distinct types of production, “custom, batch, bulk, and mass production” (Scranton 10).  His version of the rising American economy is one of diversity in production and a continuation of power vested in purchasers, and not a total transition into the hands of corporate management.

Continuing with this re-examination is Blaszczyk, who not only maintains that power in the market did not appear in the “visible hand” but was shared between producers and consumers, specifically of household goods.  Blaszczyk states “supply did not create demand in home furnishings, but demand determined supply” (Blaszczyk 13).  Producers of household goods did not drive the market for their product, the consumers did.  Batch producers, as defined by Scranton, produced “goods…made in lots of varied size, often on the basis of aggregated advance orders…producers canvassed a host of possible buyers with a range of samples…” (Scranton 10).  In the examination of batch producers of household goods in Imagining Consumers this item about canvassing is explored in detail.

Not only were consumer demands listened to, but they were the driving force behind changes in style and taste and had to be heard.  The consumer would be a driver of certain markets as much if not more as the producers themselves.  In fact, growing consumerism may have been responsible for the size, type, and success of the producers themselves.  Producers who were unable to keep up with the changing tastes of consumers (in Blaszczyk’s work these are domestic women) were left “gasping for air” (275).

This transition in historiography is a comfortable one.  Chandler’s analysis is much too broad and anonymous to accurately describe the multivariate American marketplace.  It is certainly a great work and based on its use by later scholars still has a place in the field, but it is nice to see a more realistic and bottom-up approach to the interplay of producers and consumers.

A couple of years ago I began to be fed up with the content of television overall and especially with commercials.  It seemed as though commercials were moving from informative or perhaps a little bland into a more unrealistic and increasingly asinine direction involving cartoon violence, neanderthals, etc.  These little gems were coming out around this time, reminiscent of the lightening rod salesmen in Friedman’s book terrorizing farmers.  The commercials were competing with the shows themselves, which were not much better.  After cutting down to just watching sports, I became even more frustrated with the volume of commercials on these programs.  In order to watch a Monday night football game it is necessary to stay up until 12, and half of the time you are viewing commercials.  The Superbowl, is of course the premier commercial event, and here is an example of one of this year’s finest.

Even without the commercial interruptions the shows themselves frequently utilize sales techniques, or have clothing or set pieces provided by firms.  Athletes need to drink out of cups labeled Gatorade, boxers have digitally added tattoos with websites or casino names, characters in sitcoms drive certain vehicles or wear certain clothes, and often these items in reality are unattainable given the character’s profession.  And as Susan Strasser mentions in her book,  often these forms of marketing involve “manipulation” (288).  Who wants to be manipulated?

Meanwhile the cost of monthly cable began to get a little pricey given the lack of value.  So I quit.  I have not had a television for about four years.  For complete honesty I will say that we do have a physical set, but it is just for monthly movies from Netflix!  No cable, and no antennae.  This is not meant to be an evangelical piece describing the benefits of this experiment, and I have not really sat down and thought all of the pros and cons-well, we read more, but given the bombardment of advertisement, salesmanship, and the conflict of interest between firm and consumer, cutting out one stream altogether, while perhaps a greater change for some, has been totally worthwhile.

 ”The truly great power brands are owned neither solely by the company nor by the customer.  They are “co-created” – both the company and the customer interact to create some amalgam that no single individual thought up” (105).

This raises questions about the nature of large corporations as well as the relationship between consumers and products, or even consumers and brands.  Coca-Cola, Microsoft, IBM, and GE are consistently at the top of the list of power brands.  They are even given a monetary value in accounting: “goodwill.”

How is it that the consumer has developed a relationship with a brand?  It is a symbol of a larger institution, and that is tangible, but otherwise it is still a symbol.  It is a symbol of quality, of products and services, and of course goodwill.  Many brand symbols or slogans are capable of creating emotions within consumers that are stronger, for better or for worse, than the underlying quality of what is being sold.  Sometimes they are even attributed to larger events while the underlying business or service provided is forgotten, such as Enron or Worldcom.

Brands are notable for the good feeling and memories they invoke as well.  Think Ben and Jerry’s.  Delicious.  For the most part this is a brand that fosters a positive reaction.  Aside from owning a company stock or consuming the product sold though, are power brands truly “co-created” or co-owned by both the customer as well as the corporation?

The power of these brands is hard to judge, but it is certainly a factor in the corporation’s longevity.  This is anecdotal, but many were the people who spoke about buying a GM or Ford late last year.  This was in spite of the fact that there was public concern that if one or more of the companies folded there might not be any guarantee that warranties or service could be continued.  How deep was that worry really?  Was there truly a probable cause for alarm that America would see the collapse of its auto industry?  It was a pressing argument, but deep down there seemed to be a consensus that there was no way the American government would let this happen, and they did not. 

Elected officials act in the best interest of the electorate, and the people believed in the need for American cars.  Quality arguments aside, the auto industry is intertwined with American history.  People telling stories include references to what their characters drove, such as that old Chevy or Ford.  The pain of potentially seeing these brands disappear is to some degree unimaginable, even to many who are not consumers of American cars!

Not having any experience in marketing or advertising I am going out on a limb in this discussion, but it is clear that brands and symbols play a large and material part not only in a business sense, but in a cultural sense as well.

The two films are surprisingly similar in terms of the financial action that is taking place.  In both cases an experienced but unscrupulous individual plots to takeover the more wholesome and unsuspecting “character,” the company.  The moral face of the company in Street is Bud Fox’s dad, played by Martin Sheen, and the Chairman of the Board of RJR Nabisco, played by Tom Aldredge.   Both of these individuals represent the moral values not of the corporation itself, but more of the company’s working employees, who are otherwise not considered whatever by Gekko and Johnson in their takeover bids.

Johnson and Gekko are dissimilar in style and in public.  Gekko is famously known for his “Greed is good” speech (the actual quote in the movie is different), as well as corrupting his young protege, and not simply crossing ethical lines, but reveling in it.  Johnson is presented differently, at least on the surface.  While at first hot to the idea of a leveraged buyout and his astronomical earnings potential, he quickly goes on the defensive in describing his motivations for the takeover and tells the chairman and his wife that he is not doing it for the money at all.  This is totally unbelievable, but purposefully so.

In the end neither bid works.  Johnson is forced to leave RJR Nabisco, but with $53 million ($27 after taxes), while Gekko, it is assumed will go to prison.  I am actually not convinced that one movie is better, although Wall Street was certainly the better made movie.  It is probably the charm of the Ross Johnson character as played by James Garner that makes Barbarians more likeable as a film, as Wall Street is very short on characters with any admirable traits.

It is interesting that in both films the action is always a zero sum game.  Wall Street insiders are trying to win at the expense of the company itself, the working class, friends, etc.  Characters trying to move into the Wall Street circle are usually punished for their “mistake.”  The movers themselves do not succeed in their schemes, but there is not really a happy ending to the story.  We never actually see Gekko getting punished.

These are both great films to lead into our discussion of Giants of Enterprise next week.

There almost seems to be a trick to it.  Once you become aware of more cultural nuances, the more cultural details you are able to pick out from everyday experiences or sensations.  Are kids dressing differently these days?  Why?  What are they trying to express given their specific cultural context?  Ever notice the increasing amount of anti-smoking campaigns on TV?  Have Americans always considered public health important?  Or maybe there a time when this type of thing would be seen as intrusive or perhaps impolite.

The biggest lesson drawn from this class was that the amount of variables or cultural differences that each period or generation is exposed to leaves a much wider distance between the contemporary historian and the people or era of study.  In many ways I grew up believing that most people in the past were more or less similar at base but living with a different set of circumstances or events.  Take a founding father up to the present, give him a haircut and teach him to use a computor and he will get along.  This mindset of course was in the process of changing, but in light of the stressed cultural differnces and through studying the broader details of a character’s milieu it is clear that even a period of twenty or thirty years can produce a serious amount of different stimuli or culturally accepted practice that to make general comparisons or to search for a similar base is to tread on very thin ice.

Searching for the subtle trends or trying to be aware of multiple motives is great exercise.  I am just home from a community fair held at Booz Allen Hamilton in which non-profits such as the one I work for set up booths in a conference room and employees of the firm meander around looking for volunteer opportunities.  This is in line with part of Booz’s commitment to community I was told.  Not only are the employees encouraged to volunteer on their own time, but in some cases Booz will make it worth their while to do so by way of bonuses or reimbursements.  I know this because I have periodically informed the firm, with permission, of volunteers with our organization who are also employees of BAH, and what there hours were like.

The new paradigm for corporations may be an increased participation or encouragement to benefit the community.  It is an interesting and somewhat undefined area.  There have been extremes or examples of this in the past for sure.  Bosses probably thought that company towns were great examples of benefitting a community.  In smaller firms that I have worked for employers make a point of knowing what is going on with employees and their families and try to help out if necessary in special circumstances.  Sponsering little league teams always seems to be popular with many businesses.  But it is more difficult to find an example of companies pushing so strongly on employees to volunteer on their own time and not as representatives of the firm itself. 

What benefits the firm in this case?  How would having an employee who does not necessarily disclose or openly talk about what he does but goes into the woods and helps clear trails for the park service benefit BAH in some way?  It is possible that the good feeling and mental or spiritual benefits generated by good work will carry over from the weekend and boost the employees productivity.  Or perhaps the employee will talk about working for BAH while out pulling weeds with fellow volunteers in a way that generates overall goodwill in the local population.  BAH also might be able to collate the data on employee service and use it in promotional material.

I am in no way against this practice.  It is simply an observation of the changing face of the corporation and current corporate culture.