Saturday, November 21, 2009
Quote du Jour
"I need no warrant for being, and no word of sanction upon my being. I am the warrant and the sanction." Ayn Rand
Money Spinner
A novelist seeking to create the perfect fictional tax haven might just as well set the plot in Macao, the tiny Chinese special administrative region on the south-west shores of the Pearl river delta.
The centuries-old Portuguese colony, which reverted to Chinese sovereignty in 1999, boasts all the necessary romantic elements: a cultural blend of east and west, casinos and cobbled streets, and an eclectic social mix of Jesuit priests, femme fatales and North Korean rogues. It even has a Grand Prix.
Kim Jong-nam, eldest son of North Korean dictator Kim Jong-il, is a frequent visitor to Macao. So, too, are Sheldon Adelson and Steve Wynn, the US casino entrepreneurs whose companies invested heavily in the territory when its gambling industry was liberalised in 2002.
Previously monopolised for four decades by Stanley Ho, a Eurasian tycoon born in nearby Hong Kong, Macao’s gambling industry is now bigger than its two largest rivals – Las Vegas and Atlantic City in the US – combined. In the five years to 2008, casino revenues nearly tripled to $13.6bn.
Supporting this unprecedented expansion was an influx of experienced casino executives, who soon discovered the benefits of Macao’s low tax regime. Personal income is taxed at just 12 per cent and capital gains not at all. The government’s generosity is made possible by the casino industry, which is taxed at 40 per cent.
“I have no idea what I might do next,” says one highly mobile casino executive. “But I am determined to keep Macao as my tax base.”
The $13.6bn that Macao’s 31 casinos took last year is only the tip of a much larger cash pile. Revenues equate to the “casino win” – and in VIP Baccarat, the territory’s most popular game that accounts for 67 per cent of total betting, the house win rate is typically less than 3 per cent. So to generate almost $14bn in casino revenues, the amount of money wagered must be exponentially higher.
Further complicating the picture is the role played by so-called “junkets” who bring VIP gamblers to Macao’s casinos. These middlemen extend credit to – and collect debts from – their clients, who therefore do not always bring money into the territory.
“I don’t think Macao or the central government want to see gambling revenues growing at 30, 40, 50 per cent a year,” says Grant Chum, head of regional gaming research at UBS, a financial services firm. Tax haven or not, Macao is swimming in cash and the Chinese government has decided, for now at least, that enough is enough.
--FT
The centuries-old Portuguese colony, which reverted to Chinese sovereignty in 1999, boasts all the necessary romantic elements: a cultural blend of east and west, casinos and cobbled streets, and an eclectic social mix of Jesuit priests, femme fatales and North Korean rogues. It even has a Grand Prix.
Kim Jong-nam, eldest son of North Korean dictator Kim Jong-il, is a frequent visitor to Macao. So, too, are Sheldon Adelson and Steve Wynn, the US casino entrepreneurs whose companies invested heavily in the territory when its gambling industry was liberalised in 2002.
Previously monopolised for four decades by Stanley Ho, a Eurasian tycoon born in nearby Hong Kong, Macao’s gambling industry is now bigger than its two largest rivals – Las Vegas and Atlantic City in the US – combined. In the five years to 2008, casino revenues nearly tripled to $13.6bn.
Supporting this unprecedented expansion was an influx of experienced casino executives, who soon discovered the benefits of Macao’s low tax regime. Personal income is taxed at just 12 per cent and capital gains not at all. The government’s generosity is made possible by the casino industry, which is taxed at 40 per cent.
“I have no idea what I might do next,” says one highly mobile casino executive. “But I am determined to keep Macao as my tax base.”
The $13.6bn that Macao’s 31 casinos took last year is only the tip of a much larger cash pile. Revenues equate to the “casino win” – and in VIP Baccarat, the territory’s most popular game that accounts for 67 per cent of total betting, the house win rate is typically less than 3 per cent. So to generate almost $14bn in casino revenues, the amount of money wagered must be exponentially higher.
Further complicating the picture is the role played by so-called “junkets” who bring VIP gamblers to Macao’s casinos. These middlemen extend credit to – and collect debts from – their clients, who therefore do not always bring money into the territory.
“I don’t think Macao or the central government want to see gambling revenues growing at 30, 40, 50 per cent a year,” says Grant Chum, head of regional gaming research at UBS, a financial services firm. Tax haven or not, Macao is swimming in cash and the Chinese government has decided, for now at least, that enough is enough.
--FT
Ayn Rand
Capitalism's martyred hero
For all its faults socialism is manifestly superior to capitalism in one area: the making of myths. Capitalists can never equal the emotional appeal of socialism’s martyred heroes. Ayn Rand, however, is a conspicuous exception to this rule. She has been given short shrift by the intellectual establishment.
Literary critics bemoan her cardboard characters and tabloid style. Political theorists dismiss her as a shallow thinker whose appeal is restricted to adolescents. But such disdain has done nothing to damage her popular appeal.
Rand’s books have enjoyed impressive sales since her death in 1982. But America’s shift to the left—the Democratic takeover of Congress in 2006 and Barack Obama’s election two years later—has put her back at the heart of the political debate. Conservative protesters carry posters asking “Who is John Galt?”, referring to one of Rand’s heroes.
Conservative polemicists suggest that Mr Obama, by stepping in to rescue the banks and industrial behemoths such as General Motors, is ushering in the collectivist dystopia that Rand gave warning against. Sales of “The Fountainhead” and “Atlas Shrugged” have surged. Rumours swirl that a film based on “Atlas Shrugged” is in the works.
So the publication of these two books could not have been better timed. Anne Heller is more informative on Rand’s early years in Russia. Jennifer Burns is better versed in conservative thought. Both are well worth reading, partly because Rand’s life was so extraordinary and partly because the questions that she raised about the proper power of government are just as urgent now as they ever were.
Rand was the single most uncompromising critic of the collectivist tide that swept across the capitalist world in the wake of the Depression. For her, government was nothing more than licensed robbery and altruism just an excuse for power-grabbing. Intellectuals and bureaucrats might pose as champions of the people against the powerful. But in reality they were empire builders who were motivated by a noxious mixture of envy and greed. Rand’s heroes were a different breed: the businessmen and entrepreneurs who felt the future in their bones and would not rest until they had brought it to life.
This might sound like libertarian boilerplate: Nietzsche repackaged for the Chamber of Commerce crowd. But Rand’s appeal has been undimmed by either the vituperation of her critics or the peculiarity of her admirers. Her insight in “Atlas Shrugged”—that society cannot thrive unless it is willing to give freedom to its entrepreneurs and innovators—has proved to be prescient. Even if John Galt is under threat once again in the West, he is back in business in China and India.
--The Economist
For all its faults socialism is manifestly superior to capitalism in one area: the making of myths. Capitalists can never equal the emotional appeal of socialism’s martyred heroes. Ayn Rand, however, is a conspicuous exception to this rule. She has been given short shrift by the intellectual establishment.
Literary critics bemoan her cardboard characters and tabloid style. Political theorists dismiss her as a shallow thinker whose appeal is restricted to adolescents. But such disdain has done nothing to damage her popular appeal.
Rand’s books have enjoyed impressive sales since her death in 1982. But America’s shift to the left—the Democratic takeover of Congress in 2006 and Barack Obama’s election two years later—has put her back at the heart of the political debate. Conservative protesters carry posters asking “Who is John Galt?”, referring to one of Rand’s heroes.
Conservative polemicists suggest that Mr Obama, by stepping in to rescue the banks and industrial behemoths such as General Motors, is ushering in the collectivist dystopia that Rand gave warning against. Sales of “The Fountainhead” and “Atlas Shrugged” have surged. Rumours swirl that a film based on “Atlas Shrugged” is in the works.
So the publication of these two books could not have been better timed. Anne Heller is more informative on Rand’s early years in Russia. Jennifer Burns is better versed in conservative thought. Both are well worth reading, partly because Rand’s life was so extraordinary and partly because the questions that she raised about the proper power of government are just as urgent now as they ever were.
Rand was the single most uncompromising critic of the collectivist tide that swept across the capitalist world in the wake of the Depression. For her, government was nothing more than licensed robbery and altruism just an excuse for power-grabbing. Intellectuals and bureaucrats might pose as champions of the people against the powerful. But in reality they were empire builders who were motivated by a noxious mixture of envy and greed. Rand’s heroes were a different breed: the businessmen and entrepreneurs who felt the future in their bones and would not rest until they had brought it to life.
This might sound like libertarian boilerplate: Nietzsche repackaged for the Chamber of Commerce crowd. But Rand’s appeal has been undimmed by either the vituperation of her critics or the peculiarity of her admirers. Her insight in “Atlas Shrugged”—that society cannot thrive unless it is willing to give freedom to its entrepreneurs and innovators—has proved to be prescient. Even if John Galt is under threat once again in the West, he is back in business in China and India.
--The Economist
Friday, November 20, 2009
Quote du Jour
"It has always been the prerogative of children and half-wits to point out that the emperor has no clothes. But the half-wit remains a half-wit, and the emperor remains an emperor." Neil Gaiman
An Added Bonus
Wall Street 40% Bonus Rise Fuels Buying of $43 Steaks
A 40 percent jump in Wall Street bonuses this year may bring relief to New York City and Albany as the state and its biggest metropolis struggle with a combined $14 billion in budget deficits this fiscal year and next.
New York investment houses will dole out $26 billion in bonus checks by the end of March, said Alan Johnson, president of compensation consultant Johnson Associates Inc. The money will probably boost sales of multimillion-dollar co-op apartments and generate extra income-tax revenue for state and city governments.
“I don’t think this is going to make everybody think, ‘Oh, good times are here again,’ but it may ease things a bit,” said Lawrence White, professor of economics at New York University’s Leonard N. Stern School of Business.
Before the financial meltdown slammed bank earnings and the Standard & Poor’s 500 Index of U.S. stocks dropped 38 percent last year, Wall Street’s compensation and corporate profits provided 20 percent of New York state tax revenue and 9 percent of the city’s taxes. New York banks lost $42.6 billion in 2008 and shed 30,000 jobs, according to the city’s Office of Management and Budget. The city’s unemployment rate is 10.3 percent, the most since 1993, after the private sector cut 96,600 jobs since employment peaked in August 2008.
Bonuses in 2008 fell 44 percent from the prior year, to $18.4 billion, said New York state Comptroller Thomas DiNapoli. The reduction cost the state $1 billion in personal income tax revenue and New York City $275 million, he said. State personal income tax collections in the current fiscal year’s first six months declined $4.4 billion, or 21.6 percent, from the same period a year earlier, DiNapoli’s September cash report said.
“They may be an enormous amount of money for one person, but they are how our people in the city in all industries get paid, whether you drive a cab, work in a restaurant, work in a store, whether you are a municipal employee,” Bloomberg said Feb. 5 at City Hall.
“All of this gets filtered down through our economy,” he said. “No matter what you think about the propriety of any individual person’s bonus, we want companies in the city, and we are dependent on Wall Street finance, to do well.” The mayor is the founder and majority owner of Bloomberg LP, parent of Bloomberg News.
“Certainly, it’s good news for the city if Wall Street salaries and bonuses continue to be high,” said Doug Turetsky, a spokesman for New York City’s Independent Budget Office.
Bonus increases will have a limited impact on revenue, said Matt Anderson, a spokesman for New York state’s Division of Budget. Many payments come in stock that isn’t taxed immediately, and companies that disappeared in the crisis won’t be paying any bonuses at all, he said.
--Bloomberg
A 40 percent jump in Wall Street bonuses this year may bring relief to New York City and Albany as the state and its biggest metropolis struggle with a combined $14 billion in budget deficits this fiscal year and next.
New York investment houses will dole out $26 billion in bonus checks by the end of March, said Alan Johnson, president of compensation consultant Johnson Associates Inc. The money will probably boost sales of multimillion-dollar co-op apartments and generate extra income-tax revenue for state and city governments.
“I don’t think this is going to make everybody think, ‘Oh, good times are here again,’ but it may ease things a bit,” said Lawrence White, professor of economics at New York University’s Leonard N. Stern School of Business.
Before the financial meltdown slammed bank earnings and the Standard & Poor’s 500 Index of U.S. stocks dropped 38 percent last year, Wall Street’s compensation and corporate profits provided 20 percent of New York state tax revenue and 9 percent of the city’s taxes. New York banks lost $42.6 billion in 2008 and shed 30,000 jobs, according to the city’s Office of Management and Budget. The city’s unemployment rate is 10.3 percent, the most since 1993, after the private sector cut 96,600 jobs since employment peaked in August 2008.
Bonuses in 2008 fell 44 percent from the prior year, to $18.4 billion, said New York state Comptroller Thomas DiNapoli. The reduction cost the state $1 billion in personal income tax revenue and New York City $275 million, he said. State personal income tax collections in the current fiscal year’s first six months declined $4.4 billion, or 21.6 percent, from the same period a year earlier, DiNapoli’s September cash report said.
“They may be an enormous amount of money for one person, but they are how our people in the city in all industries get paid, whether you drive a cab, work in a restaurant, work in a store, whether you are a municipal employee,” Bloomberg said Feb. 5 at City Hall.
“All of this gets filtered down through our economy,” he said. “No matter what you think about the propriety of any individual person’s bonus, we want companies in the city, and we are dependent on Wall Street finance, to do well.” The mayor is the founder and majority owner of Bloomberg LP, parent of Bloomberg News.
“Certainly, it’s good news for the city if Wall Street salaries and bonuses continue to be high,” said Doug Turetsky, a spokesman for New York City’s Independent Budget Office.
Bonus increases will have a limited impact on revenue, said Matt Anderson, a spokesman for New York state’s Division of Budget. Many payments come in stock that isn’t taxed immediately, and companies that disappeared in the crisis won’t be paying any bonuses at all, he said.
--Bloomberg
Best Out
The Best Power Reserve: A. Lange & Söhne's 31
The Best Tourbillon: Breguet
The Best Skeleton Dial: Vacheron Constantin
Bachelor Pads
The decline and fall
Bachelors always seemed to have it made. With only themselves to support, they could flash their cash and trick out their apartments in such a way that James Bond himself would feel at home shaking himself a martini in their ultra-cool, chick-magnet pads.
Then the recession thundered in, and suddenly young men found themselves one of the hardest hit demographic segments. Bachelors have been walloped, but many are taking their lumps and moving on.
Anthony Lunn, a broker with Blackstone Properties of New York, has a listing for a $2,450-a-month for a “luxury bachelor pad” on Craigslist. The headline says it all: “Pop out the bottle of Champagne and Grey Goose.”
A year ago, apartments like this one might have gone to a single person; now, “bachelors are doubling up and saving their money,” Mr. Lunn said.
Aaron Seawood, a broker with Anchor Associates, says young men still desire apartments with the “sexy factor,” which he describes as any property that screams: “Take a risk; do something different. You’re not worried about school districts right now.”
But these days, to afford these sexy-factor places, Mr. Seawood said, bachelors make concessions, either by sacrificing location or by “tag teaming,” as he calls subdividing a space. In previous years, for a $3,500-a-month one-bedroom, “I would have had a few solo guys. Now it’s like, ‘Me and my buddy are going to be here,’ ” he said.
--Continue reading...
Bachelors always seemed to have it made. With only themselves to support, they could flash their cash and trick out their apartments in such a way that James Bond himself would feel at home shaking himself a martini in their ultra-cool, chick-magnet pads.
Then the recession thundered in, and suddenly young men found themselves one of the hardest hit demographic segments. Bachelors have been walloped, but many are taking their lumps and moving on.
Anthony Lunn, a broker with Blackstone Properties of New York, has a listing for a $2,450-a-month for a “luxury bachelor pad” on Craigslist. The headline says it all: “Pop out the bottle of Champagne and Grey Goose.”
A year ago, apartments like this one might have gone to a single person; now, “bachelors are doubling up and saving their money,” Mr. Lunn said.
Aaron Seawood, a broker with Anchor Associates, says young men still desire apartments with the “sexy factor,” which he describes as any property that screams: “Take a risk; do something different. You’re not worried about school districts right now.”
But these days, to afford these sexy-factor places, Mr. Seawood said, bachelors make concessions, either by sacrificing location or by “tag teaming,” as he calls subdividing a space. In previous years, for a $3,500-a-month one-bedroom, “I would have had a few solo guys. Now it’s like, ‘Me and my buddy are going to be here,’ ” he said.
--Continue reading...
Wednesday, November 18, 2009
Quote du Jour
"Apathy can be overcome by enthusiasm, and enthusiasm can only be aroused by two things: first, an ideal, with takes the imagination by storm, and second, a definite intelligible plan for carrying that ideal into practice." Arnold J. Toynbee
Your Left Foot: Now Left Out
The New Porsche 911 Carrera Cabriolet
Most Porsche drivers enjoy sawing through the gears, working all three pedals and listening to the engine sing. With the new 911, however, working the stick is no longer a priority. This 2009 model equipped with a newly domesticated version of Porsche’s PDK transmission, originally developed for racing.
The PDK (its full name is Porsche Doppelkupplungsgetriebe, or double clutch gearbox) uses two wet clutches to shift its seven forward gears with minimal interruption in the flow of power to the wheels. And though it can make all the gear changes without any help from the driver, mechanically it’s a manual transmission. It does not connect to the engine through the fluid coupling known as a torque converter that is used by conventional automatics.
Such distinctions aside, say “auf wiedersehen” to the clutch pedal. Porsche has been experimenting with automatics since the days of the 356 models, and first offered its semi-automatic Sportomatic in a 911 in 1968. The fully automatic Tiptronic, shifted by tapping the center console’s gear selector, made its debut with the 1990 models. It was renamed the Tiptronic S a few years later when steering-wheel shift buttons were added.
Tiptronics proved popular with those who couldn’t, wouldn’t or shouldn’t work a clutch. But now that they are being supplanted by the PDK transmission (except in the 911 Turbo and Cayenne S.U.V., for the time being), it seems hard to find anyone who will truly miss that gearbox when it is gone. A 6-speed manual continues to be available.
Despite packaging and reliability refinements, the technology adds 66 pounds over the 6-speed manual, mostly to the 911’s derriere. It also contributed $4,080 toward the $119,925 sticker price of my 911 S Cabriolet test car. The PDK transmission is 0.2 second quicker than the 6-speed manual getting to 60 m.p.h., Porsche says; in Sport Plus mode, the margin doubles to 0.4 seconds.
Externally, 911s appear all but unchanged for 2009. Unseen changes, however, make them handle with greater precision, brake better and go faster. New 3.6- and 3.8-liter 6-cylinder engines get direct-fuel-injection systems that facilitate higher compression ratios. Horsepower increases by 20 in the 3.6, to 345, and up 30 for the 3.8, to 385.
The engines are not simply more powerful, they run in a more relaxed manner, too, thanks to the PDK’s seven forward gears (compared with the Tiptronic’s five). Gearing is similar to the 6-speed manual in the lower gears, but the PDK’s seventh speed permits cruising at far lower engine speeds (2,200 r.p.m. at 80 miles an hour).
In sum, this really is a car that can be driven effortlessly by almost anyone. And that is the part that’s tough for me to get my head around. Driving a Porsche used to be a daunting experience, best left to experienced drivers (ideally, holding high-risk insurance). Now, with systems like PDK, Porsche Stability Management and Porsche Active Suspension Management, some of the fear of God has been engineered out.
--NYT
Most Porsche drivers enjoy sawing through the gears, working all three pedals and listening to the engine sing. With the new 911, however, working the stick is no longer a priority. This 2009 model equipped with a newly domesticated version of Porsche’s PDK transmission, originally developed for racing.
The PDK (its full name is Porsche Doppelkupplungsgetriebe, or double clutch gearbox) uses two wet clutches to shift its seven forward gears with minimal interruption in the flow of power to the wheels. And though it can make all the gear changes without any help from the driver, mechanically it’s a manual transmission. It does not connect to the engine through the fluid coupling known as a torque converter that is used by conventional automatics.
Such distinctions aside, say “auf wiedersehen” to the clutch pedal. Porsche has been experimenting with automatics since the days of the 356 models, and first offered its semi-automatic Sportomatic in a 911 in 1968. The fully automatic Tiptronic, shifted by tapping the center console’s gear selector, made its debut with the 1990 models. It was renamed the Tiptronic S a few years later when steering-wheel shift buttons were added.
Tiptronics proved popular with those who couldn’t, wouldn’t or shouldn’t work a clutch. But now that they are being supplanted by the PDK transmission (except in the 911 Turbo and Cayenne S.U.V., for the time being), it seems hard to find anyone who will truly miss that gearbox when it is gone. A 6-speed manual continues to be available.
Despite packaging and reliability refinements, the technology adds 66 pounds over the 6-speed manual, mostly to the 911’s derriere. It also contributed $4,080 toward the $119,925 sticker price of my 911 S Cabriolet test car. The PDK transmission is 0.2 second quicker than the 6-speed manual getting to 60 m.p.h., Porsche says; in Sport Plus mode, the margin doubles to 0.4 seconds.
Externally, 911s appear all but unchanged for 2009. Unseen changes, however, make them handle with greater precision, brake better and go faster. New 3.6- and 3.8-liter 6-cylinder engines get direct-fuel-injection systems that facilitate higher compression ratios. Horsepower increases by 20 in the 3.6, to 345, and up 30 for the 3.8, to 385.
The engines are not simply more powerful, they run in a more relaxed manner, too, thanks to the PDK’s seven forward gears (compared with the Tiptronic’s five). Gearing is similar to the 6-speed manual in the lower gears, but the PDK’s seventh speed permits cruising at far lower engine speeds (2,200 r.p.m. at 80 miles an hour).
In sum, this really is a car that can be driven effortlessly by almost anyone. And that is the part that’s tough for me to get my head around. Driving a Porsche used to be a daunting experience, best left to experienced drivers (ideally, holding high-risk insurance). Now, with systems like PDK, Porsche Stability Management and Porsche Active Suspension Management, some of the fear of God has been engineered out.
--NYT
Gucci and the American Man
Gucci leather goods have been a mainstay in American style for more than 50 years
And like all the tokens of the natty class, they've come to stand for something. At one time or another, the brand has been synonymous with the playboys of '60s Rome, the disco set of '70s New York, and the preppy Wasps of the '80s. To carry or wear Gucci today is to carry or wear more than 80 years of luxury and privilege, and that prompts the question of why any American man would ever want to bear such a load. We took a random sampling among owners of Gucci loafers. Some say it's because they look good with pretty much everything. Others say it's because the gleam of the horse-bit buckle adds a flash of light to their stride.
None of this is to say that Gucci's place in American style is set in stone. Tom Ford reinvented the company in the mid-'90s as the final say in jet-set decadence, and Frida Giannini is leading the brand into the future with a new Manhattan store that's closer in size to a Sam's Club than any luxury boutique.
And as the company evolves, Gucci could become more Pharrell Williams than Ronald Reagan. But its classic leather loafers can’t be beat, no matter who’s wearing them.
Read: Legendary or Notorious? The Gucci Horsebit Loafer
And like all the tokens of the natty class, they've come to stand for something. At one time or another, the brand has been synonymous with the playboys of '60s Rome, the disco set of '70s New York, and the preppy Wasps of the '80s. To carry or wear Gucci today is to carry or wear more than 80 years of luxury and privilege, and that prompts the question of why any American man would ever want to bear such a load. We took a random sampling among owners of Gucci loafers. Some say it's because they look good with pretty much everything. Others say it's because the gleam of the horse-bit buckle adds a flash of light to their stride.
None of this is to say that Gucci's place in American style is set in stone. Tom Ford reinvented the company in the mid-'90s as the final say in jet-set decadence, and Frida Giannini is leading the brand into the future with a new Manhattan store that's closer in size to a Sam's Club than any luxury boutique.
And as the company evolves, Gucci could become more Pharrell Williams than Ronald Reagan. But its classic leather loafers can’t be beat, no matter who’s wearing them.
Read: Legendary or Notorious? The Gucci Horsebit Loafer
Quote du Jour
"The first lover is kept a long while, when no offer is made of a second." Francois de La Rochefoucauld
A Hint of Hype, A Taste of Illusion
They pour, sip and, with passion and snobbery, glorify or doom wines. But studies say the wine-rating system is badly flawed.
Robert M. Parker Jr., arguably the wine-critic, guides consumers by assigning wines a grade on a 100-point scale. Critics like Mr. Parker exert enormous influence. The medals won at the 29 major U.S. wine competitions medals are considered so influential that wineries spend well over $1 million each year in entry fees. According to a 2001 study of Bordeaux wines, a one-point bump in Robert Parker's wine ratings averages equates to a 7% increase in price, and the price difference can be much greater at the high end.
Given the high price of wine and the enormous number of choices, a system in which industry experts comb through the forest of wines, judge them, and offer consumers the meaningful shortcut of medals and ratings makes sense.
But what if the successive judgments of the same wine, by the same wine expert, vary so widely that the ratings and medals on which wines base their reputations are merely a powerful illusion? That is the conclusion reached in two recent papers in the Journal of Wine Economics.
Both articles were authored by the same man, a unique blend of winemaker, scientist and statistician. The unlikely revolutionary is a soft-spoken fellow named Robert Hodgson, a retired professor who taught statistics at Humboldt State University. Mr. Hodgson is also the proprietor of Fieldbrook Winery, a small operation that puts out about 1,500 cases a year.
A few years ago, Mr. Hodgson began wondering how wines, such as his own, can win a gold medal at one competition, and lose at others. He decided to take a course in wine judging, and met G.M Pucilowski, chief judge at the California State Fair wine competition, North America's oldest and most prestigious. Mr. Hodgson joined the Wine Competition's advisory board, and eventually "begged" to run a controlled scientific study of the tastings, conducted in the same manner as the real-world tastings. The board agreed, but expected the results to be kept confidential.
There is a rich history of scientific research questioning whether wine experts can really make the fine taste distinctions they claim. For example, a 1996 study in the Journal of Experimental Psychology showed that even flavor-trained professionals cannot reliably identify more than three or four components in a mixture, although wine critics regularly report tasting six or more.
There are eight in this description, from The Wine News, as quoted on wine.com, of a Silverado Limited Reserve Cabernet Sauvignon 2005 that sells for more than $100 a bottle: "Dusty, chalky scents followed by mint, plum, tobacco and leather. Tasty cherry with smoky oak accents…" Another publication, The Wine Advocate, describes a wine as having "promising aromas of lavender, roasted herbs, blueberries, and black currants." What is striking about this pair of descriptions is that, although they are very different, they are descriptions of the same Cabernet. One taster lists eight flavors and scents, the other four, and not one of them coincide.
--Continue reading...
Robert M. Parker Jr., arguably the wine-critic, guides consumers by assigning wines a grade on a 100-point scale. Critics like Mr. Parker exert enormous influence. The medals won at the 29 major U.S. wine competitions medals are considered so influential that wineries spend well over $1 million each year in entry fees. According to a 2001 study of Bordeaux wines, a one-point bump in Robert Parker's wine ratings averages equates to a 7% increase in price, and the price difference can be much greater at the high end.
Given the high price of wine and the enormous number of choices, a system in which industry experts comb through the forest of wines, judge them, and offer consumers the meaningful shortcut of medals and ratings makes sense.
But what if the successive judgments of the same wine, by the same wine expert, vary so widely that the ratings and medals on which wines base their reputations are merely a powerful illusion? That is the conclusion reached in two recent papers in the Journal of Wine Economics.
Both articles were authored by the same man, a unique blend of winemaker, scientist and statistician. The unlikely revolutionary is a soft-spoken fellow named Robert Hodgson, a retired professor who taught statistics at Humboldt State University. Mr. Hodgson is also the proprietor of Fieldbrook Winery, a small operation that puts out about 1,500 cases a year.
A few years ago, Mr. Hodgson began wondering how wines, such as his own, can win a gold medal at one competition, and lose at others. He decided to take a course in wine judging, and met G.M Pucilowski, chief judge at the California State Fair wine competition, North America's oldest and most prestigious. Mr. Hodgson joined the Wine Competition's advisory board, and eventually "begged" to run a controlled scientific study of the tastings, conducted in the same manner as the real-world tastings. The board agreed, but expected the results to be kept confidential.
There is a rich history of scientific research questioning whether wine experts can really make the fine taste distinctions they claim. For example, a 1996 study in the Journal of Experimental Psychology showed that even flavor-trained professionals cannot reliably identify more than three or four components in a mixture, although wine critics regularly report tasting six or more.
There are eight in this description, from The Wine News, as quoted on wine.com, of a Silverado Limited Reserve Cabernet Sauvignon 2005 that sells for more than $100 a bottle: "Dusty, chalky scents followed by mint, plum, tobacco and leather. Tasty cherry with smoky oak accents…" Another publication, The Wine Advocate, describes a wine as having "promising aromas of lavender, roasted herbs, blueberries, and black currants." What is striking about this pair of descriptions is that, although they are very different, they are descriptions of the same Cabernet. One taster lists eight flavors and scents, the other four, and not one of them coincide.
--Continue reading...
Taint of Corruption Is No Barrier to U.S. Visa
Several times a year, Teodoro Nguema Obiang arrives at the doorstep of the United States from his home in Equatorial Guinea, on his way to his $35 million estate in Malibu, Calif. (pictured above), his fleet of luxury cars, his speedboats and private jet. And he is always let into the country.
The nation’s doors are open to Mr. Obiang, the forest and agriculture minister of Equatorial Guinea and the son of its president, even though federal law enforcement officials believe that “most if not all” of his wealth comes from corruption related to the extensive oil and gas reserves discovered more than a decade and a half ago off the coast of his tiny West African country, according to internal Justice Department and Immigration and Customs Enforcement documents.
State Department officials said Equatorial Guinea’s close ties to the American oil industry were the reason for the lax enforcement of the law. Production of the country’s nearly 400,000 barrels of oil a day is dominated by American companies like ExxonMobil, Hess and Marathon.
“Of course it’s because of oil,” said John Bennett, the United States ambassador to Equatorial Guinea from 1991 to 1994, adding that Washington has turned a blind eye to the Obiangs’ corruption and repression because of its dependence on the country for natural resources.
The Justice Department memorandum, dated Sept. 4, 2007, and obtained by The New York Times, said the government believed Mr. Obiang’s assets were derived “from extortion, theft of public funds or other corrupt conduct.” From April 2005 to April 2006, the memorandum said, Mr. Obiang funneled at least $73 million into the United States, using shell corporations and offshore bank accounts to launder the money and ultimately buy his Malibu estate and a luxury jet.
The document identified several wire transfers by Mr. Obiang from 2005 and 2006, beginning with a bank in Equatorial Guinea, then going to the central Banque de France and landing in American accounts at Wachovia, Bank of America and UBS. In one six-week period in 2006, Mr. Obiang transferred $33,799,799.99 to the United States, it said, which was used to buy a Gulfstream V jet.
Part of his wealth, the document said, comes from a “revolutionary tax” that Mr. Obiang placed on timber. Instead of sending the payments to the treasury of Equatorial Guinea, Mr. Obiang, who is considered likely to be a successor to his father, has “insisted that the payments be made directly to him,” it said.
Mr. Obiang also “routinely travels to the United States with over $1 million in cash” that he fails to declare, a crime punishable by up to five years in prison.
--NYT
Tuesday, November 17, 2009
Quote du Jour
"When a man is tired of London, he is tired of life; for there is in London all that life can afford." Samuel Johnson
Signs of Life in London's Art Market
Sales at Sotheby's and Christie's show which artists will win from the rebound
With the contemporary-art market slowly recovering, London auction houses held a key round of sales over the weekend that showed prices are already bouncing back for a few mid-career European artists with bright palettes and loyal followings.
After months of scaled-back spending, collectors began competing for colorful paintings by German artists such as Martin Kippenberger and elegant metal sculptures by several British artists. On the other hand, bidders largely bypassed video art and anything priced over £1 million ($1.6 million). Those preferences will likely affect price levels for work by dozens of artists and may set the tone for next month's major fall art auctions in New York.
Overall, the world's chief auction houses -- Sotheby's and Christie's International PLC -- sold a combined £26.3 million worth of postwar and contemporary art. The result easily surpasses their combined presale estimate of £18.7 million but is down 51% from a larger round of sales last October. A two-part sale by boutique auction house Phillips de Pury & Co. brought in £6.7 million, down 16% from last year.
All the auction houses struggled to find enough quality material for these sales. Christie's contemporary sale on Friday evening only had 25 pieces, half the usual amount. The auctioneer compensated by following the sale with a separate offering of modern Italian art. Sotheby's, meanwhile, shifted its contemporary evening sale to the afternoon and combined it with a large set of Arab and Iranian artworks.
Still, collectors are in the mood again to bid, and the added energy at the sales was palpable. Munich collector Ingvild Goetz says she shied away from buying at auction during the "hype years" but decided to attend these sales so she could plug a few artistic holes in her collection. Specifically, she paid Sotheby's £85,250 for Peter Fischli and David Weiss's duck sculpture, "Les Repos des Canards (Ducks At Rest)," well over its £70,000 low estimate.
--Continue reading...
With the contemporary-art market slowly recovering, London auction houses held a key round of sales over the weekend that showed prices are already bouncing back for a few mid-career European artists with bright palettes and loyal followings.
After months of scaled-back spending, collectors began competing for colorful paintings by German artists such as Martin Kippenberger and elegant metal sculptures by several British artists. On the other hand, bidders largely bypassed video art and anything priced over £1 million ($1.6 million). Those preferences will likely affect price levels for work by dozens of artists and may set the tone for next month's major fall art auctions in New York.
Overall, the world's chief auction houses -- Sotheby's and Christie's International PLC -- sold a combined £26.3 million worth of postwar and contemporary art. The result easily surpasses their combined presale estimate of £18.7 million but is down 51% from a larger round of sales last October. A two-part sale by boutique auction house Phillips de Pury & Co. brought in £6.7 million, down 16% from last year.
All the auction houses struggled to find enough quality material for these sales. Christie's contemporary sale on Friday evening only had 25 pieces, half the usual amount. The auctioneer compensated by following the sale with a separate offering of modern Italian art. Sotheby's, meanwhile, shifted its contemporary evening sale to the afternoon and combined it with a large set of Arab and Iranian artworks.
Still, collectors are in the mood again to bid, and the added energy at the sales was palpable. Munich collector Ingvild Goetz says she shied away from buying at auction during the "hype years" but decided to attend these sales so she could plug a few artistic holes in her collection. Specifically, she paid Sotheby's £85,250 for Peter Fischli and David Weiss's duck sculpture, "Les Repos des Canards (Ducks At Rest)," well over its £70,000 low estimate.
--Continue reading...
A. Lange & Söhne
Named Germany’s Top Luxury Brand, Again
Every two years the Munich Brand Rating agency and the prominent German business and news magazine Wirtschaftswoche (”Economic Week”) team up to identify the leading luxury brands in Germany. This year, data was collected from interviews with more than 150 experts in a variety of industries.
For the second time in a row, A. Lange & Söhne was named the top-ranking luxury brand with a total of 242 out of a possible 300 points. Lange stood above arguably better-known brands such as the Mercedes Benz-owned Maybach (218) and famed sports car manufacturer Porsche (197).
Every two years the Munich Brand Rating agency and the prominent German business and news magazine Wirtschaftswoche (”Economic Week”) team up to identify the leading luxury brands in Germany. This year, data was collected from interviews with more than 150 experts in a variety of industries.
For the second time in a row, A. Lange & Söhne was named the top-ranking luxury brand with a total of 242 out of a possible 300 points. Lange stood above arguably better-known brands such as the Mercedes Benz-owned Maybach (218) and famed sports car manufacturer Porsche (197).
Sunday, November 15, 2009
Quote du Jour
"Preoccupation with money is the great test of small natures, but only a small test of great ones." Nicolas de Chamfort
Bringing Backup
The dollar’s days as the world’s reserve currency are far from over
Worries about the dollar’s dominance of the global monetary system are not new. But debate about replacing the beleaguered dollar has resurfaced in the wake of a global financial and economic crisis that began in America. China and Russia, which have huge reserves that are mainly dollar denominated, have talked about shifting away from the greenback. India changed the composition of its reserves by buying 200 tonnes of gold from the IMF.
None of this threatens the dominance of the dollar yet, particularly as a dramatic shift out of the currency would be damaging to the countries (such as China) that hold a huge amount of dollar-denominated assets. But a new paper by economists at the IMF acknowledges that the global crisis has reignited the debate about anchoring the world’s monetary system on one country’s currency.
Some say that America’s role as the principal issuer of the global reserve currency gives it an unfair advantage. America has a unique ability to borrow from foreigners in its own currency, and wins when the dollar depreciates, since its assets are mainly in foreign currency and its liabilities in dollars. By one estimate America enjoyed a net capital gain of around $1 trillion from the gradual depreciation of the dollar in the years before the crisis.
But what are the alternatives to relying on the dollar? One possibility is a system with several competing reserve currencies. Over time, the euro and China’s yuan (if it became convertible) could emerge as competitors. This would require a great deal of policy co-ordination among issuing countries. But by having several reserve currencies the “privilege” that America now enjoys would be available more widely, providing an incentive to compete to attract users to different currencies.
Another alternative is a greater reliance on SDRs, the IMF’s quasi-currency, which operates as a claim on a basket of currencies: the dollar, euro, sterling and yen. Because the SDR’s value depends on several currencies, it shares many of the benefits of a multiple-currency system. But even the IMF says that using SDRs seems “doubtful unless the system…fails in a major way”.
The most radical solution of all is a new global currency that could be used in international transactions and would float alongside domestic currencies. The fund argues that this would have to be issued by a new international monetary institution “disconnected from the economic problems of any individual country”. This currency could serve as a risk-free global asset.
Radical as this may sound, it is not a new idea. John Maynard Keynes had something similar in mind when he proposed an International Clearing Union. This global bank would issue its own currency, called the bancor, in which all trade accounts would be settled. In the absence of such a bank the world will have to make do with the current system. So worries about the dollar’s value aside, its global dominance is secure for now.
--Economist
Worries about the dollar’s dominance of the global monetary system are not new. But debate about replacing the beleaguered dollar has resurfaced in the wake of a global financial and economic crisis that began in America. China and Russia, which have huge reserves that are mainly dollar denominated, have talked about shifting away from the greenback. India changed the composition of its reserves by buying 200 tonnes of gold from the IMF.
None of this threatens the dominance of the dollar yet, particularly as a dramatic shift out of the currency would be damaging to the countries (such as China) that hold a huge amount of dollar-denominated assets. But a new paper by economists at the IMF acknowledges that the global crisis has reignited the debate about anchoring the world’s monetary system on one country’s currency.
Some say that America’s role as the principal issuer of the global reserve currency gives it an unfair advantage. America has a unique ability to borrow from foreigners in its own currency, and wins when the dollar depreciates, since its assets are mainly in foreign currency and its liabilities in dollars. By one estimate America enjoyed a net capital gain of around $1 trillion from the gradual depreciation of the dollar in the years before the crisis.
But what are the alternatives to relying on the dollar? One possibility is a system with several competing reserve currencies. Over time, the euro and China’s yuan (if it became convertible) could emerge as competitors. This would require a great deal of policy co-ordination among issuing countries. But by having several reserve currencies the “privilege” that America now enjoys would be available more widely, providing an incentive to compete to attract users to different currencies.
Another alternative is a greater reliance on SDRs, the IMF’s quasi-currency, which operates as a claim on a basket of currencies: the dollar, euro, sterling and yen. Because the SDR’s value depends on several currencies, it shares many of the benefits of a multiple-currency system. But even the IMF says that using SDRs seems “doubtful unless the system…fails in a major way”.
The most radical solution of all is a new global currency that could be used in international transactions and would float alongside domestic currencies. The fund argues that this would have to be issued by a new international monetary institution “disconnected from the economic problems of any individual country”. This currency could serve as a risk-free global asset.
Radical as this may sound, it is not a new idea. John Maynard Keynes had something similar in mind when he proposed an International Clearing Union. This global bank would issue its own currency, called the bancor, in which all trade accounts would be settled. In the absence of such a bank the world will have to make do with the current system. So worries about the dollar’s value aside, its global dominance is secure for now.
--Economist
Johann Rupert
Meet the man behind Richemont
Compagnie Financière Richemont SA is a Swiss luxury goods company that was founded in 1988 by the Rupert family. It has four main business areas: jewellery, watches, writing instruments and clothing.
Among its multitude of brands are some of the world's most prominent watchmakers. Richemont owns Vacheron Constantin, A. Lange & Söhne, Jaeger-LeCoultre, Officine Panerai and International Watch Co., among others.
Recently, South African billionaire Johann Rupert suggested investors stock up on bespoke Cartier necklaces or Van Cleef & Arpels rings if they’re concerned that economic stimulus programs and government debt will fuel inflation.
“If we enter hyperinflation, you’re going to be so glad that you bought that stuff two months or six months ago,” Rupert told investors on a call today that followed results from Cie. Financiere Richemont SA, which is controlled by his family. “If inflation picks up, you’re going to see people running into your stores, buying high jewelry.”
Rupert will take on the chief executive’s role at Richemont when Norbert Platt steps down due to illness next year. Known as “Rupert the Bear” for his negative outlook on economic trends, analysts including Kepler Capital Markets’ Jon Cox said the billionaire’s remarks were less pessimistic than opinions offered in May, when he predicted social unrest and no signs “green shoots” of recovery were sprouting.
“I’ve never seen a period like the last year and up to today where highly, highly intelligent people have diametrically opposed views,” Rupert said today. Opinions range from “the recession turning into something worse on the one side, and on the other side, fears of a hyperinflation. Both arguments are very persuasive. So we try and manage the business in order to survive and do well given both scenarios.”
Depression-era products of Richemont’s luxury brands have held their value following a worse economic crisis than that seen today: a 1936 Van Cleef & Arpels custom jewelry piece with a “Mystery Setting” hidden behind the gems was sold for $326,500 by Christie’s at a New York auction last month.
--Continue reading...
Compagnie Financière Richemont SA is a Swiss luxury goods company that was founded in 1988 by the Rupert family. It has four main business areas: jewellery, watches, writing instruments and clothing.
Among its multitude of brands are some of the world's most prominent watchmakers. Richemont owns Vacheron Constantin, A. Lange & Söhne, Jaeger-LeCoultre, Officine Panerai and International Watch Co., among others.
Recently, South African billionaire Johann Rupert suggested investors stock up on bespoke Cartier necklaces or Van Cleef & Arpels rings if they’re concerned that economic stimulus programs and government debt will fuel inflation.
“If we enter hyperinflation, you’re going to be so glad that you bought that stuff two months or six months ago,” Rupert told investors on a call today that followed results from Cie. Financiere Richemont SA, which is controlled by his family. “If inflation picks up, you’re going to see people running into your stores, buying high jewelry.”
Rupert will take on the chief executive’s role at Richemont when Norbert Platt steps down due to illness next year. Known as “Rupert the Bear” for his negative outlook on economic trends, analysts including Kepler Capital Markets’ Jon Cox said the billionaire’s remarks were less pessimistic than opinions offered in May, when he predicted social unrest and no signs “green shoots” of recovery were sprouting.
“I’ve never seen a period like the last year and up to today where highly, highly intelligent people have diametrically opposed views,” Rupert said today. Opinions range from “the recession turning into something worse on the one side, and on the other side, fears of a hyperinflation. Both arguments are very persuasive. So we try and manage the business in order to survive and do well given both scenarios.”
Depression-era products of Richemont’s luxury brands have held their value following a worse economic crisis than that seen today: a 1936 Van Cleef & Arpels custom jewelry piece with a “Mystery Setting” hidden behind the gems was sold for $326,500 by Christie’s at a New York auction last month.
--Continue reading...
Thursday, November 12, 2009
Quote du Jour
"If you would be known, and not know, vegetate in a village; If you would know, and not be known, live in a city." C.C. Colton
Time Management
It's hectic being the marketing and communications chief for a luxury watchmaker
I'm the manager of marketing and communications for Vacheron Constantin, a 251-year-old Swiss manufacturer of complicated, luxury timepieces. Based in New York, I'm responsible for all marketing and communications for the U.S. and Canada, which includes advertising, press relations, events, merchandising, display, sales promotions, B2B and B2C (business-to-consumer) relationships, strategic partnerships, and training.
I'm also responsible for monthly reporting to our headquarters in Geneva, writing the annual marketing plan, and organizing our participation in the famous Geneva watch fair that takes place every April.
Looking back on my B-school experience, I think that school you choose is more important than your courses. I would enroll in the most diverse, international program you're accepted to. Generally, courses are fairly standard between MBA programs; what varies is the composition of the school's student body.
--Continue reading...
I'm the manager of marketing and communications for Vacheron Constantin, a 251-year-old Swiss manufacturer of complicated, luxury timepieces. Based in New York, I'm responsible for all marketing and communications for the U.S. and Canada, which includes advertising, press relations, events, merchandising, display, sales promotions, B2B and B2C (business-to-consumer) relationships, strategic partnerships, and training.
I'm also responsible for monthly reporting to our headquarters in Geneva, writing the annual marketing plan, and organizing our participation in the famous Geneva watch fair that takes place every April.
Looking back on my B-school experience, I think that school you choose is more important than your courses. I would enroll in the most diverse, international program you're accepted to. Generally, courses are fairly standard between MBA programs; what varies is the composition of the school's student body.
--Continue reading...
The Golden Boom
A Connecticut jeweler cashes in
The people of Greenwich, Connecticut, the hedge-fund capital of the U.S., know a golden opportunity when they see one.
With the price of gold futures reaching a record $1,072 an ounce this week, they’re carting watches, bracelets, rings and necklaces to a Hyatt Regency hotel off Interstate 95. There, representatives of Cash for Gold are writing checks for the precious metal.
“Once the price of gold went over $1,000, I knew it was the time to do it,” said Joy Kruger, a real estate agent who sold her unwanted jewelry yesterday for $2,700.
Greenwich and other well-to-do towns are the best places for mining used gold, said Anthony Holdampf, president of Westport, Connecticut-based Cash for Gold. While the company has licenses to operate in 31 communities in Connecticut, California, New Jersey and Florida, it’s narrowing its focus to the wealthiest ones and has set up camp in Greenwich for more than a year.
“They show up dressed very fancy, maybe wearing their Rolexes,” Holdampf said. Affluent sellers have “twice as much gold as anyone else, and plenty of gold they could get rid of.”
--Bloomberg
The people of Greenwich, Connecticut, the hedge-fund capital of the U.S., know a golden opportunity when they see one.
With the price of gold futures reaching a record $1,072 an ounce this week, they’re carting watches, bracelets, rings and necklaces to a Hyatt Regency hotel off Interstate 95. There, representatives of Cash for Gold are writing checks for the precious metal.
“Once the price of gold went over $1,000, I knew it was the time to do it,” said Joy Kruger, a real estate agent who sold her unwanted jewelry yesterday for $2,700.
Greenwich and other well-to-do towns are the best places for mining used gold, said Anthony Holdampf, president of Westport, Connecticut-based Cash for Gold. While the company has licenses to operate in 31 communities in Connecticut, California, New Jersey and Florida, it’s narrowing its focus to the wealthiest ones and has set up camp in Greenwich for more than a year.
“They show up dressed very fancy, maybe wearing their Rolexes,” Holdampf said. Affluent sellers have “twice as much gold as anyone else, and plenty of gold they could get rid of.”
--Bloomberg
Tuesday, November 10, 2009
Quote du Jour
"The state is nothing but an instrument of oppression of one class by another--no less so in a democratic republic than in a monarchy." Friedrich Engels
After the Wall
The Collapse of Communism Marked an Ideological Victory, but Some Wonder If China Now Has a Competing Autocratic Model
Some Western thinkers now argue that democracy is in a new competition with unexpectedly robust authoritarian regimes over which form of government can better deliver prosperity, security and national strength.
Critics of that view argue that democracy has far better serviced the needs of people and greatly boosted living standards through much of Central and Eastern Europe. They add that it remains to be seen whether autocrats anywhere can satisfy people's aspirations in the long run.
In the summer of 1989, American political economist Francis Fukuyama foresaw the "End of History" in a landmark essay, meaning that no credible alternative had survived to political and economic liberty as practiced in the U.S. and Western Europe. All that remained, he argued, was for other countries to catch up.
Today, history is back, according to writers such as Israeli military historian Azar Gat. In his new book, "Victorious and Vulnerable," he says that although democracy is the most benign system in history, it will have to demonstrate its advantages all over again in the face of its latest rival: authoritarian capitalism, as practiced by self-confident powers such as China and Russia.
In retrospect, 1989 led to the near-universal adoption of capitalism, but the same can't be said of democracy. Indeed, by switching from Communist economics to capitalism -- albeit a state-controlled kind that Adam Smith wouldn't recognize -- China and Russia have adopted "a far more efficient brand of authoritarianism" than they had during the Cold War, says Prof. Gat.
Other political scientists say it is too early to tell whether the two powers really represent an alternative path of development to the West."It is by no means certain that China can maintain its existing structure of power," says Niall Ferguson, an economic historian who teaches at Harvard Business School.
Liberal democracy remains the system that's best suited to protecting individual rights, says Mr. Carothers: "People don't like to be mistreated by their government." However, Mr. Carothers says "people also want government to take care of them and make them feel secure." Leaders in some countries can exploit that desire to prioritize order and economic growth over individual rights and liberty, he says.
Today, 46% of all countries are full-blown democracies, according to Freedom House, a Washington-based nonpartisan think tank that gets much of its funding from the U.S. government. That's up from 36% in 1989. Much of the progress has been in former Soviet satellites in Central Europe such as Poland, which has achieved dramatic economic advances under democracy.
But the spread of democracy has stalled in recent years, according to Chris Walker, director of studies at Freedom House. The proportion of liberal democracies in world, 46%, is exactly where it was in 1999, according to Freedom House. While countries such as Serbia, Croatia and Slovakia have become more democratic in recent years, Vladimir Putin's Russia and a majority of its neighbors from the former Soviet Union have been sliding back into authoritarianism, Mr. Walker says.
Today, even Prof. Fukuyama is more circumspect than in 1989 about how history will play out. China's unexpected success at developing a capitalist economy while keeping one-party rule is the biggest challenge to the notion that autocracy is fated to die out, Prof. Fukuyama says.
"They've mastered economic development under authoritarian circumstances, and you can argue they've done it faster because they're authoritarian," he says.
--Continue reading...
Some Western thinkers now argue that democracy is in a new competition with unexpectedly robust authoritarian regimes over which form of government can better deliver prosperity, security and national strength.
Critics of that view argue that democracy has far better serviced the needs of people and greatly boosted living standards through much of Central and Eastern Europe. They add that it remains to be seen whether autocrats anywhere can satisfy people's aspirations in the long run.
In the summer of 1989, American political economist Francis Fukuyama foresaw the "End of History" in a landmark essay, meaning that no credible alternative had survived to political and economic liberty as practiced in the U.S. and Western Europe. All that remained, he argued, was for other countries to catch up.
Today, history is back, according to writers such as Israeli military historian Azar Gat. In his new book, "Victorious and Vulnerable," he says that although democracy is the most benign system in history, it will have to demonstrate its advantages all over again in the face of its latest rival: authoritarian capitalism, as practiced by self-confident powers such as China and Russia.
In retrospect, 1989 led to the near-universal adoption of capitalism, but the same can't be said of democracy. Indeed, by switching from Communist economics to capitalism -- albeit a state-controlled kind that Adam Smith wouldn't recognize -- China and Russia have adopted "a far more efficient brand of authoritarianism" than they had during the Cold War, says Prof. Gat.
Other political scientists say it is too early to tell whether the two powers really represent an alternative path of development to the West."It is by no means certain that China can maintain its existing structure of power," says Niall Ferguson, an economic historian who teaches at Harvard Business School.
Liberal democracy remains the system that's best suited to protecting individual rights, says Mr. Carothers: "People don't like to be mistreated by their government." However, Mr. Carothers says "people also want government to take care of them and make them feel secure." Leaders in some countries can exploit that desire to prioritize order and economic growth over individual rights and liberty, he says.
Today, 46% of all countries are full-blown democracies, according to Freedom House, a Washington-based nonpartisan think tank that gets much of its funding from the U.S. government. That's up from 36% in 1989. Much of the progress has been in former Soviet satellites in Central Europe such as Poland, which has achieved dramatic economic advances under democracy.
But the spread of democracy has stalled in recent years, according to Chris Walker, director of studies at Freedom House. The proportion of liberal democracies in world, 46%, is exactly where it was in 1999, according to Freedom House. While countries such as Serbia, Croatia and Slovakia have become more democratic in recent years, Vladimir Putin's Russia and a majority of its neighbors from the former Soviet Union have been sliding back into authoritarianism, Mr. Walker says.
Today, even Prof. Fukuyama is more circumspect than in 1989 about how history will play out. China's unexpected success at developing a capitalist economy while keeping one-party rule is the biggest challenge to the notion that autocracy is fated to die out, Prof. Fukuyama says.
"They've mastered economic development under authoritarian circumstances, and you can argue they've done it faster because they're authoritarian," he says.
--Continue reading...
A Hybrid Stakes Out High Ground
The 2010 Mercedes-Benz S400
The Mercedes-Benz S400 BlueHybrid neatly dodges the the luxury hybrid stereotype of "guiltless" power. Lexus was especially known for its free-lunch hybrid theory: that cars could become both speedy and stingy by combining robust electric motors with big V-6 and V-8 engines.
The Lexus LS 600h L, the direct competitor to the new Mercedes-Benz S400, is a perfect example. The big Lexus was saddled with a $30,000 hybrid price premium and a weighty battery pack that hogged trunk space. The Benz, on the other hand, doesn’t fake it by trying to convince people that they can have a fat V-8 cake with mileage meringue and a cherry of virtue on top.
By downsizing the S550’s gasoline engine by 36 percent — a 3.5-liter V-6 replaces the usual 5.5-liter V-8 — the Mercedes holds down costs and raises the mileage even before the hybrid equipment is added. And the 275-horsepower V-6, like the 4-cylinder in the Toyota Prius, uses the fuel-efficient Atkinson cycle, which squeezes maximum energy from each combustion cycle.
To that, the S400 adds a 20-horse electric motor (for a total of 295 horsepower) and a lithium-ion battery. Indeed, Mercedes says this is the first car with a lithium-ion battery engineered expressly for an automobile. Yes, the Mercedes is a mild hybrid. To save energy, its gas engine can stop and start automatically at speeds below 9 m.p.h., but it never accelerates on electricity alone.
But in conjunction with the smaller engine, the mild approach pays off. As huge and decadent as any S-Class — the flagship Mercedes sedan — the hybrid delivered a solid 29 m.p.g. on a highway run from Brooklyn to eastern Pennsylvania, a 7 m.p.g. improvement over the V-8 model.
Another advantage is price: the S400 actually costs $3,650 less than the S550 V-8 model: $88,825 instead of $92,475. Buyers can toss out the hybrid calculators that figure how many years they’ll have to drive before the fuel savings offset the hybrid premium. (The S400 also qualifies for a $1,150 federal alternative vehicle rebate.)
Overall, the hybrid system is well-suited to the S-Class’s personality: Serene and traditional, the S-Class is a chamber-music salon on wheels. Once up to speed, I was content to listen to my iPod — smartly controlled by the single-knob Comand system — and let the world pass by.
--NYT
The Mercedes-Benz S400 BlueHybrid neatly dodges the the luxury hybrid stereotype of "guiltless" power. Lexus was especially known for its free-lunch hybrid theory: that cars could become both speedy and stingy by combining robust electric motors with big V-6 and V-8 engines.
The Lexus LS 600h L, the direct competitor to the new Mercedes-Benz S400, is a perfect example. The big Lexus was saddled with a $30,000 hybrid price premium and a weighty battery pack that hogged trunk space. The Benz, on the other hand, doesn’t fake it by trying to convince people that they can have a fat V-8 cake with mileage meringue and a cherry of virtue on top.
By downsizing the S550’s gasoline engine by 36 percent — a 3.5-liter V-6 replaces the usual 5.5-liter V-8 — the Mercedes holds down costs and raises the mileage even before the hybrid equipment is added. And the 275-horsepower V-6, like the 4-cylinder in the Toyota Prius, uses the fuel-efficient Atkinson cycle, which squeezes maximum energy from each combustion cycle.
To that, the S400 adds a 20-horse electric motor (for a total of 295 horsepower) and a lithium-ion battery. Indeed, Mercedes says this is the first car with a lithium-ion battery engineered expressly for an automobile. Yes, the Mercedes is a mild hybrid. To save energy, its gas engine can stop and start automatically at speeds below 9 m.p.h., but it never accelerates on electricity alone.
But in conjunction with the smaller engine, the mild approach pays off. As huge and decadent as any S-Class — the flagship Mercedes sedan — the hybrid delivered a solid 29 m.p.g. on a highway run from Brooklyn to eastern Pennsylvania, a 7 m.p.g. improvement over the V-8 model.
Another advantage is price: the S400 actually costs $3,650 less than the S550 V-8 model: $88,825 instead of $92,475. Buyers can toss out the hybrid calculators that figure how many years they’ll have to drive before the fuel savings offset the hybrid premium. (The S400 also qualifies for a $1,150 federal alternative vehicle rebate.)
Overall, the hybrid system is well-suited to the S-Class’s personality: Serene and traditional, the S-Class is a chamber-music salon on wheels. Once up to speed, I was content to listen to my iPod — smartly controlled by the single-knob Comand system — and let the world pass by.
--NYT
Monday, November 2, 2009
Couture Artisans Seek French Aid
Fashion Craftsman Struggle to Keep Up in a Fragile, Shrinking Business
France's specialized embroiderers, seamstresses, tailors and hatmakers—once the backbone of a thriving fashion business—are today among the hardest-hit victims of the global slowdown in luxury-goods sales. As fashion houses cancel orders and cut costs, these small businesses are now turning to the French government for help.
On Monday, France's Prime Minister Francois Fillon is scheduled to host a meeting of government advisers, luxury-goods executives and artisans to discuss aid for the country's craftsmen. Among the dilemmas to be discussed are the fragility of the sector and its importance to France's image, and the difficulty in recruiting and training young artisans, according to a government official.
Tax breaks and new rules on labeling—in particular to highlight the origin or artisanal nature of a product—are being considered though they may not be announced right away, according to government officials.
"In the long-term, France's position as a leader of fashion and creativity is at risk," says Clarisse Reille, a luxury-goods consultant hired by France's Industry Ministry to help draw up an aid package for France's textile businesses.
Orders for luxury garments are down some 30% this year in France from 2008, as consumers cut spending, says Ms. Reille.
France's world-famous fashion industry has for decades relied on "petites mains," the artisans who hand craft gowns, shoes and hats. But their influence has been steadily declining.
The advent of "ready-to-wear" clothing some 40 years ago began chipping away at the importance of skilled artisans as fashion houses started making their clothes in large-scale and more cost-efficient factories.
Recently, however, some high-end fashion brands have outsourced even their more complex production abroad. With cheaper labor abroad, many of France's artisans have been faced with a difficult choice: go out of business or start outsourcing themselves.
--WSJ
France's specialized embroiderers, seamstresses, tailors and hatmakers—once the backbone of a thriving fashion business—are today among the hardest-hit victims of the global slowdown in luxury-goods sales. As fashion houses cancel orders and cut costs, these small businesses are now turning to the French government for help.
On Monday, France's Prime Minister Francois Fillon is scheduled to host a meeting of government advisers, luxury-goods executives and artisans to discuss aid for the country's craftsmen. Among the dilemmas to be discussed are the fragility of the sector and its importance to France's image, and the difficulty in recruiting and training young artisans, according to a government official.
Tax breaks and new rules on labeling—in particular to highlight the origin or artisanal nature of a product—are being considered though they may not be announced right away, according to government officials.
"In the long-term, France's position as a leader of fashion and creativity is at risk," says Clarisse Reille, a luxury-goods consultant hired by France's Industry Ministry to help draw up an aid package for France's textile businesses.
Orders for luxury garments are down some 30% this year in France from 2008, as consumers cut spending, says Ms. Reille.
France's world-famous fashion industry has for decades relied on "petites mains," the artisans who hand craft gowns, shoes and hats. But their influence has been steadily declining.
The advent of "ready-to-wear" clothing some 40 years ago began chipping away at the importance of skilled artisans as fashion houses started making their clothes in large-scale and more cost-efficient factories.
Recently, however, some high-end fashion brands have outsourced even their more complex production abroad. With cheaper labor abroad, many of France's artisans have been faced with a difficult choice: go out of business or start outsourcing themselves.
--WSJ
Resilient Wreckers
The market for MBAs is defying the economic gloom
Deciding whether to go to business school or not is difficult. The long-term benefits sound substantial: an improved chance of getting a corner office and a six-figure salary. But the short-term costs are also weighty: two years at a leading American business school can cost $100,000 even before you take living expenses and forgone income into account. Many of the world’s most famous business people, from Bill Gates down, did not bother with an MBA, whereas some of the most illustrious products of business schools have covered themselves with ignominy of late.
Still, on balance, the benefits probably outweigh the costs, particularly in straitened times. People with MBAs are more likely to get jobs than people without them, and earn higher salaries. Employers also pay MBAs on average twice as much as people with only undergraduate degrees.
One of the most striking developments is that, business schools are offering ever more diverse courses, giving prospective students a better chance of finding one that matches their aptitudes and interests. It normally takes two years to earn an MBA at an American school. At many European schools, including IMD and Insead, it only takes a year.
There is also a boom in specialised qualifications. London Business School has introduced a master’s in finance. Nottingham Business School offers six different degree courses, including one in corporate social responsibility. Bordeaux Business School offers an Executive Wine MBA.
The Economist’s rankings rely heavily on students’ own assessment of their time at business school in general, and of whether their earning power rose and their “networks” expanded in particular. One reason why IESE did so well is that 98% of graduates found jobs within three months of graduation with an average basic salary of $125,000—a remarkable feat in the current economic climate.
--Economist
Deciding whether to go to business school or not is difficult. The long-term benefits sound substantial: an improved chance of getting a corner office and a six-figure salary. But the short-term costs are also weighty: two years at a leading American business school can cost $100,000 even before you take living expenses and forgone income into account. Many of the world’s most famous business people, from Bill Gates down, did not bother with an MBA, whereas some of the most illustrious products of business schools have covered themselves with ignominy of late.
Still, on balance, the benefits probably outweigh the costs, particularly in straitened times. People with MBAs are more likely to get jobs than people without them, and earn higher salaries. Employers also pay MBAs on average twice as much as people with only undergraduate degrees.
One of the most striking developments is that, business schools are offering ever more diverse courses, giving prospective students a better chance of finding one that matches their aptitudes and interests. It normally takes two years to earn an MBA at an American school. At many European schools, including IMD and Insead, it only takes a year.
There is also a boom in specialised qualifications. London Business School has introduced a master’s in finance. Nottingham Business School offers six different degree courses, including one in corporate social responsibility. Bordeaux Business School offers an Executive Wine MBA.
The Economist’s rankings rely heavily on students’ own assessment of their time at business school in general, and of whether their earning power rose and their “networks” expanded in particular. One reason why IESE did so well is that 98% of graduates found jobs within three months of graduation with an average basic salary of $125,000—a remarkable feat in the current economic climate.
--Economist
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