Sunday, June 30, 2019

Books Read - Q2 2019

This quarter was a slow one for reading - only 9 books. Been doing lots of writing, which you can see over at Oddball Stocks. (Previously: see the Q1 books list (16) and the 2018 list which was 113.)

  • Fraud Casebook: Lessons from the Bad Side of Business (3.5/5) These are almost all small business embezzlement cases - not big public company frauds. In most of these cases the fraud uses fake expenses. A person in accounting or accounts payable arranges to pay his company or a buddy's company based on bogus invoices, the purpose obviously being to receive those funds. (That's why it is so strange that the Tesla payables guy who was indicted just paid one vendor instead of another.) At companies with workers who are paid in cash, there could be fake payroll instead of fake vendors, but that is small time. There are a handful of cases of diverting revenue, but those are pretty small time too, like hotel employees renting out vacant rooms, or retail employees not ringing up sales. (Retail businesses have three measures of sales: those recorded on the POS system, the cash and noncash tender received, and the change in inventories.) But the big money embezzlements are fake expenses or, at someplace really profitable but really disorganized like a doctor's office, an office manager with the checkbook just writing herself checks. Which brings up the big theme of the book, in my view: small businesses can be terribly under-managed but still remain in business. If they are not noticing 1 or 2% of revenue being diverted, how much attention are they paying to any aspect of the business, at least on the cost side? I have noticed that firms that go bankrupt have poor accounting systems. How hard would it be to buy these small companies with checked out owners and improve them? You'd think there would be low hanging fruit: ditch low profit work to focus on high profit, charge more for the high profit based on improved service, cull low performers and replace them with high performers (who are a bargain). One friend of the blog thinks that there will always be profits (and high returns on capital) to be had in small business because there is so much work to be done and so few smart people to organize it.
  • Heat: An Amateur's Adventures as Kitchen Slave, Line Cook, Pasta-Maker, and Apprentice to a Dante-Quoting Butcher in Tuscany (4.5/5) New Yorker editor (and author of Among the Thugs) Bill Buford got very interested in cooking and worked at the Mario Batali restaurant Babbo in Greenwich Village for a year as a "kitchen slave". As you would expect from someone who made the cut at NYer, he's very astute and it's a great read. When first starting at Babbo he's cutting celery and throwing the leaves away. Batali happens to come in the kitchen and see them in the trash: "What have you done? You're throwing away the best part of the celery! Writer guy - busted! Remember our rule: we make money by buying food, fixing it up, and getting other people to pay for it. We do not make money by buying food and throwing it away." Something that's been missing from my short rib recipe: "turn the braising liquid into a sauce... pour the liquid they were cooked in through a strainer into another pot.. take this dense, aromatic, already highly extracted liquid and hammer it: you put it back on a burner and boil it to hell. Just torch it... keep boiling the thing [and skimming the fat] until it's reduce by more than half, when, lo and behold, it is no longer a braising liquid or a broth: it's a sauce." He mentions that northern Italians are polenta eaters, Tuscans are bean eaters, and "a Napoletano is a macaroni eater, the belief in Italy being not that you are what you eat but that you're the starch." Mentions economic analysis by Giovanni Rebora: "until recently, there had always been plenty of meat... meat was consumed in quantities that, to us, seem excessive. It was also cheap. Meat was so available because farm animals were, in the pre-plastic days, essential for many other things besides dinner: like leather for belts, boots, helmets, and the adornments required by Europe's vast armies". Also mentions that the diagrams for how to butcher an animal: "each one different, no two cuts alike, with few shared terms... every country-and in Italy, every region and, sometimes, every town-has its own unique way of breaking an animal down into dinner size portions." Good description from a review on Goodreads: "I felt that the most interesting parts were those chronicling his time in the kitchen at Babbo and telling Batali's personal story. The parts that, in the end, were the least interesting to me were those detailing the regional gastronomy of Italy, or the history of pasta... even as a person interested in food and cooking, some of these histories just went into too much detail and were too lengthy to hold my interest (for example, a seemingly unending chapter on when and why cooks starting adding eggs to their pasta dough)..."
  • Stalin: Triumph and Tragedy (2.5/5) In 1991, it was called the "most candid and fullest reappraisal of Stalin to date by a Soviet source." However, for me it was redundant because I already read Khrushchev Remembers last year. Like that memoir, this biography was anti-Stalin but only from a "true" Communist perspective. Reading about how Stalin "betrayed the Revolution" is incredibly tedious. The book which we really need - and I do not think it exists - would analyze the Bolshevik revolution and subsequent history of the USSR as an inter-ethnic conflict, because that is what it was. Two things of note: first, at the end of his life, Lenin was isolated and possibly killed by Stalin, Kamenev, and Bukharin. (Just as Stalin was isolated and possibly killed by Beria!) Second, Stalin and Trotsky were born within two weeks of each other in 1879. There is a quote from a book by Essad Bey about the two men: "Trotsky and Stalin were the two opposing poles of the Communist Party. Neither in personal nor political terms did they converge at any point. Trotsky was a brilliant European, an experienced and conceited journalist, and Stalin was a typical Asiatic, a man without vanity or personal needs, with the cold, dark mind of an eastern conspirator. Two men such as these were bound to hate each other."
  • Working (4/5) By Robert Caro, two-time Pulitzer Prize-winning author of the Robert Moses biography The Power Broker and then the multi-volume Lyndon Johnson series. It took him seven years to write the Moses book and he still is not finished with LBJ. This collection of essays is about his research process - "turning every page" of archival materials, plus thousands of interviews. (For example, Caro got the guy who fixed LBJ's Texas Senate race - he made up 200 votes - to confess because he was an old man and proud of his role.) Similar to McPhee's recent book about his writing process. Caro got interested in Moses as a young reporter, when he saw that Moses - an unelected urban planner - had the power to completely reshape New York City. Moses used techniques like giving booze to state legislators during prohibition, or directing insurance premiums for the infrastructure to brokerages controlled by legislators. This book is great because you learn a lot about LBJ, Moses, and Caro without having to read the thousands of pages of the five biographies - it's a capsule summary, and it's additionally helpful because Caro talks about his motivations for dedicating his life to this, which you would not find in the underlying books. Moses was born 1888, LBJ in 1908, and Caro in 1935. Caro is a very clever and indefatigable researcher but his writing is not as smooth as someone like John McPhee (a fellow New Yorker writer). When the New Yorker excerpted Power Broker, editor William Shawn condensed it - something that Caro was not happy about, but he was paid more for the excerpts than he had been seven years earlier for the whole book. ("The New Yorker series is a very readable redaction of the original — and without sacrificing much essential information, easier on the attention span than the book, which requires an immense time commitment.")
  • Fortune's Children: The Fall of the House of Vanderbilt (3/5) A Vanderbilt descendant (Arthur T Vanderbilt II) wrote this in 1989 to answer the question frequently asked of him, "why aren't you rich?" The answer is that the descendants of Cornelius, starting with his grandchildren, spent the money extremely rapidly, largely on houses. The worst offender - and the villain of the book - is a woman named Alva, who married William K Vanderbilt, the son of William H Vanderbilt, who was the eldest son and primary heir of the Commodore. This grandson (W.K.), husband of Alva, was weak and allowed her to dissipate a huge amount of the fortune on a series of mansions. (Would you be surprised to hear that she was a suffragette, and that she later divorced him?) Their "Marble House" cost $11 million in 1892, at a time when an ounce of gold was equivalent to $20. The 550,000 ounces of gold is $700 million in today's dollars. Apparently the bulk of this expense was to buy 500,000 cubic feet of marble. The U.S. GDP in 1890 was apparently about $15 billion, so this house cost almost a tenth of a percent of GDP (spread over several years), which would be more like $13 billion in today's dollars. (This overstates the expense because GDP has grown so much in real terms.) However you look at it, this was a massive malinvestment, and it was just one of the mansions - a summer house in Rhode Island used for a small part of the year. The best part is that in 1932 she was forced to sell it (worst possible time) for only $100,000 (one cent on the dollar). The psychology (mistakes and delusions) of these elite WASPs at the turn of the century is a window into how founding stock Americans lost their country. Don't worry about leaving too much money to your descendants because they'll waste it. Try to leave them good genes and culture.
  • Cities and the Wealth of Nations: Principles of Economic Life (3/5) Wish I'd realized that "Cities and the Wealth of Nations attempts to do for economics what The Death and Life of Great American Cities did for modern urban planning", because I'm only interested in Jacobs' thoughts on urban planning, not economics. She wrote this in 1984 and her thought was that macro-economics was a shambles (true): "Its undoing was the good fortune of having been believed in and acted upon in a big way. We think of the experiments of particle physicists and space explorers as being extraordinarily expensive and so they are. But the costs are as nothing compared with the incomprehensibly huge resources that banks, industries, governments and international institutions... have poured into tests of macro-economic theory. Never has a science, or supposed science, been more generously indulged." She's not the brightest star in the sky (or most honest?) as she's at a loss for why Germany, Northern Italy, and Southern Italy had varying levels of success after receiving Marshall Plan aid. That makes it hard to believe that any of her thoughts on economics would be worthwhile. And it didn't take a genius to point out - as she did in her key, first work - that having Robert Moses bulldoze your neighborhood to build an expressway is good for the people using the expressway but bad for you. There are a few interesting thoughts on economics though. Writing about stagflation - "a condition of high prices and too little work" - she observes "this condition is not abnormal or unprecedented. Rather, it is the normal and ordinary condition to be found in poor and backward economies the world over." This is a great point. She thinks that cities rather than nations are the most salient macro-economic entities: "most nations are composed of collections or grab bags of very different economies, rich regions and poor ones within the same nation." She contrasts "import replacing cities" with "supply regions" - "the great deficiency of poverty-stricken and backward economies is that they do not produce amply and diversely for themselves, depending to a ridiculous degree on imports instead." Successful cities grow to replace their imports and create "city regions" - "a dense, rich mixture of city and rural activities". Then there are supply regions - "stunted and bizarre economies" - that can be temporarily rich but are too focused on exporting one good and ultimately crash because they never advanced to import replacement. Uruguay did this during the early 20th C by focusing on ranching cattle and sheep, doing very well during WWII but crashing afterward due to competition from Australia and New Zealand plus substitutes for wool and leather. Uruguay did then try to do some import replacement, but directed from the top down, and failed because it "lacked the ranges of skills, the symbiotic nests of producers' goods and services, and the practice and improvising and adapting." She says, "today Uruguay has what is called a Third World Economy, but even when it was prospering, Uruguay had a Third World economy... supply regions are inherently overspecialized and wildly unbalanced economies, hence unresilient and fragile, helpless when they lose their fragments of distant markets." Who else is like this? North Dakota, the Arab oil states, even Iowa is far too dependent on growing carbs and selling them to foreigners. Attempts at making these places prosperous are like the Tennessee Valley Authority boondoggles - they fail for lack of the organic, gradual establishment of an import replacing city. One of her ultimate points is that "national or imperial currencies give faulty and destructive feedback to city economies." One last concept is "transactions of decline," like the growth of Sun Belt cities: "financed by draining older cities of their earnings."
  • The Buried: An Archaeology of the Egyptian Revolution (4/5) The latest by Peter Hessler (previously on China: 1, 2, 3). This is his story of living in Cairo during the Arab Spring and revolution / coups in Egypt. Successful writing means finding interesting things to write about - one of the keys to McPhee's success. However, revolution tip: stay away from crowds and protests. When there are episodes of violence during a short event like a revolution or war, or a long event like a drug war, it comes down to location, location, location. Although he did visit protests in person (and broke his foot running away from gunfire), Hessler and his family lived in the nice neighborhood of Cairo called Zamalek, which is on an island in the Nile called Gezira. Zamalek has "quiet, leafy streets and 19th-century apartment blocks" in Art Deco style - sounds like La Condesa in Mexico City. When people in this part of the world are successful, one thing they do is build a six story building for their extended family. Interesting things about Egypt: Great Pyramid of Giza was tallest structure in world for 4,300 years. The monument building in Egypt shows the evolution of kingship. Kings as parasites. [Remember Against the Grain.] "After Christians began to reconquer the Iberian Peninsula, in the late 11th C, scholars translated the Arabic versions of Greek classics into Latin." Uh oh: "In a country where systems and laws had always been weak, there were other forces that kept the place from collapsing." (We don't have that?) Hessler has the idea that language textbooks "teach much more than just vocabulary and grammar." One funny thing about him - he never writes about food. He made friends with his garbage man Sayyid and got in hot water for his writing that exposed the guy's funny habits. There is a Chinese presence in Egypt, and of course Hessler could talk to them because his project before Egypt and Arabic was China and Chinese. "After 11 years in China, I couldn't recall a single instance in which a Chinese shopkeeper gave me too much change. But in Cairo this happened more times than I could count." It seems like the Chinese will be the ones to organize and colonize Africa, because they don't have white guilt or Christian sympathy for the weak. One problem that the Egyptians have, and a reason they need outside organization, is low literacy. (Another problem is that 40 percent of Egyptians married to cousins.) Hessler thinks that the low literacy is because written, formal Arabic is so different than spoken Egyptian. This leads to one of the funniest episodes in the book, a parliamentary election where the ballot has names and symbols, which the candidates pick from a list of government approved ones (that include knives, rifles, and scorpions). One man outside a polling station told him, "I voted for the lamp and the helicopter." The clan elders tell them which symbols to vote for.
  • The Pioneers: The Heroic Story of the Settlers Who Brought the American Ideal West (3/5) This caught my eye because of McCullough's use of both "pioneers" and "settlers" in the title. (See my review of Audubon, On The Wings Of The World: "Audubon represents early American pioneers, settlers, and frontiersmen - words you never hear anymore, replaced by 'immigrants'".) Maybe not surprisingly, my favorite part of this book was the first third, which had Congregationalists from Massachusetts carving out the first permanent settlement of the new United States in the Territory Northwest of the River Ohio (at Marietta, Ohio). One of the founders (of the land company; he never lived there) would climb up hills in New England with a barometer to measure their elevation. Random farming fact - a corn crop in 1789 was measured at 20,000 bushels on 400 acres (50b/ac). The blacksmith forge a center of social and industrial activity. One question: was Ft Harmar built to protect Indians from Scots Irish settlers? Or at least to prevent settlement?
  • A Naturalist at Large: The Best Essays of Bernd Heinrich (3/5) In 1793, a German schoolteacher named Sprengel published his idea that flowers are the reproductive organs of plants (using bees). The ideas was considered crazy and he was fired. Some highlights from Bernd: "Individual bumblebees of any one species learned to become specialist foragers on the flowers of specific but different plant species. They thereby increased their foraging profits by learned skills in flower finding and handling, as they carried pollen from an individual plant of one species to another flower of the same species... those plants in turn co-evolved to accentuate flower differences that favored the bees' becoming specialists (and hence reliable pollinators of those plants)." I always tell people that nests aren't birds' "houses," but - "downy and hairy woodpeckers excavate tree holes in November, apparently for the sole purpose of sleeping in them at night." Also: "Biology is in large part history, which is what separates it from physics and chemistry. And to gain a historical perspective into any specific biological pattern requires seeing where else the phenomenon may be found, and then asking if the pattern is associated with any of a large number of environmental factors that may have been in common or different with respect to a related species." I liked his Nesting Season and Beaver Bog books from last year better.

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