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The Payoff – Why Wall Street Always Wins

The Wall Street crash of 1929 – 1933 that precipitated and exacerbated the Great Depression led to a series of stringent financial regulations.  The S&L crisis of the 1980s resulted in the prosecutions of hundreds of executives.  What has been called the Great Recession of 2008 has, 4 years later, resulted in neither regulations nor prosecutions, despite a self-professed reformist president being elected in 2008 by an electorate demanding reforms.  In Jeff Connaughton’s new book, The Payoff – Why Wall Street Always Wins, we get an insider’s perspective as to why even common-sense, highly popular reforms aren’t enacted:  “In Washington, only the Wall Street lobby is concerned about fraud investigations. And their concern is to prevent them.”

For more than 2 decades, Connaughton spent time in Washington as part of the Permanent Class, both within government and as a lobbyist.  Tying himself to Senator (and now Vice President) Joe Biden, he used that relationship  to make millions as a lobbyist.  While technically a Democrat, as a lobbyist Connaughton was indifferent to the politics of his clients.  “The rest of the country may be divided into red and blue, but DC is green, and cheerfully so.”

When Biden became Vice President, his senate seat was filled by Ted Kaufman, who immediately declared that he wasn’t going to seek a 2nd term.  “I later learned from reporters that Wall Street was frustrated that they couldn’t find a way to harness Ted, because he wasn’t running for re-election” said Connaughton, brought on board as Kaufman’s Chief of Staff.  Both Kaufman and Connaughton vowed that they’d spend their two years “fighting for accountability for the financial crisis…to ensure there would never be another one.”

Yet after 2 years, Connaughton admits failure and predicts another crisis:  “There have been no high-profile prosecutions…the stock market has become even more dominated by computer-driven trading, too-big-to-fail banks continue to act lawlessly…and regulatory reforms are being written with the help of Wall Street lawyers.”  Why is this?  How did the biggest financial catastrophe in more than 60 years change nothing?  People looking for a smoking gun will be disappointed.  “It’s not a tale of bags filled with cash and quid pro quos.”  Then what is it?

Simple self-interest:  “Party cohesion and the desire to make a munificent living go a long way to enforce silence” and conformity, says Connaughton.  Politicians don’t represent the voters, they represent themselves.  The simple fact is that of all a politician’s constituents, corporate interests are best able to guarantee a payoff:  Money now, to stay in power, and money later, with a career as a lobbyist or other special interest.  Few are willing to “burn every bridge…set flame to the ship that would take me back there,” as Connaughton has done.

Politicians are supposed to represent us, the voter, but don’t.  But why should this be shocking?  In private enterprise, employees are supposed to represent  their customers.  Be in business long enough, though, and you know how often we compromise our dedication to customers.  When exploring how something as horrible like Auschwitz could occur, Theodor Adorno found, “One pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much.”  If this describes our corporate culture, it surely describes our political culture as well.  (I discuss the corporate culture here.)

This book isn’t as well written as something we might see from Michael Lewis.  It’s a bit dry, and in some parts it seems most concerned with settling scores (Biden comes off as thoroughly unlikable).  But for anyone interested in understanding why nothing substantive has changed on Wall Street over the past 4 years, this book is a must read.


The Happiness Hypothesis – Put Wisdom to the Test

In the quest for happiness and meaning, bits of wisdom fly at us constantly – from friends, strangers, even fortune cookies.  But little sticks.  Proust said, “We do not receive wisdom, we must discover it for ourselves.”  In The Happiness Hypothesis, Jonathan Haidt beautifully combines philosophy and science into a page-turning, exhilarating exploration of ancient and modern ideas about happiness and the human behaviors that affect it.  If Proust is right, and we need to discover wisdom, Haidt provides a great map.

I saw the scary mouse. But seriously, a lake?

We begin with metaphor – a novice rider seated on an experienced elephant – representing thinking vs. automatic process.  What can make the relationship contentious is that while the elephant (our limbic system) has been around for a million years, the rider (our frontal cortex) has been around for only 40,000 years.  Our body, not entirely trusting the new part, has cleverly installed an override mechanism for the elephant to take control in times of trouble.

When there is harmony, there is happiness, while disagreement leads to unhappiness.  Conflict occurs because the elephant, focused on survival (gene dissemination), sees danger everywhere, even when it doesn’t exist, constantly vetoing our commands to be open and receptive.  From an evolutionary perspective, this makes sense.  For a rabbit, missing a meal is not the end of the world; another carrot will come along.  But miss the owl overhead just once and its game over.  For the rabbit (and for humans), mere survival equates with success.

Achievement gives us a rush of happiness. But the sensation is from “getting,” not “having.” We feel the change in status, not its new level. So it fades.

But doesn’t success lead to happiness?  For most definitions of success, no.  Haidt describes a “hedonic treadmill,” where expectations rise at the same pace as success (wealth/prestige).  Even when we do reach our goals, we receive no lasting happiness; all we’ve done is “raise the bar for future success.”  Our judgement about now is based on whether it is better or worse than what we’ve become accustomed to.  “Adaptation is just a property of neurons:  Nerve cells respond vigorously to new stimuli, but gradually they habituate.”  Haidt drives this point home by showing that lottery winners and quadriplegics return to their base levels of happiness within weeks of striking it rich or losing control of their body.

It’s ironic how hard it is to permanently increase your happiness.  The Greek perspective was fatalistic: “Call no man happy until he is dead.”  In the Declaration of Independence, we have “the pursuit of Happiness,” implying a strenuous, potentially unsuccessful effort.  Professor Darrin McMahon points out, “In virtually every Indo-European language, the modern word for happiness is cognate with luck, fortune or fate.”  Happ was the Middle English word for “chance, fortune, what happens in the world,” McMahon writes, “giving us such words as ‘happenstance,’ ‘haphazard,’ ‘hapless,’ and ‘perhaps.’ ” This view of happiness is essentially tragic: It sees life as consisting of the things that happen to you; if more good things than bad happen, you are happy.

But the heart of this book is optimism and discovery.  Not only does Haidt give insight into how to become (and stay) happier, but the read itself is full of insight and learning.  The ground covered is eclectic:  Western moral philosophy; ideas of virtue in the sacred writings from India, China, and the Mediterranean cultures; the bonds between parents and children; the latest scientific research in biology, psychology, and sociology.  Haidt easily explains challenging topics in everyday language, where discussions of the brain rub shoulders with the sayings of the Buddha, and the evolutionary reasons for gossip share the page with discussions of karma.

The Happiness Hypothesis is a wonderful and nuanced book that provides deep insight into the some of the most important questions in life:  Why are we here?  What kind of life should we lead?  What paths lead to happiness?  From the ancient philosophers to cutting edge scientists, Haidt weaves a tapestry of the best and the brightest, culminating in a stunning, final chapter on living a meaningful life.  A truly inspiring book.


The Remarkable Power of Habits

The only difference between those who have failed and those who have succeeded lies in the difference of their habits.  Good habits are the key to all success.  Bad habits are the unlocked door to failure.  I will form good habits and become their slave.”  (Og Mandino)

For adults, the argument between nature vs. nurture has some sense of fait accompli.  What we inherited from our parents has long since been determined, and as we age, our environment would seem to make only minor alterations to the tapestry of our lives.  However, there’s a layer between “who we are” and “what we are,” namely, habits.  “Habits are so strong that they cause our brains to cling to them at the exclusion of all else, including common sense.”  What seems like free will, of making carefully considered decisions, is in fact nothing more than acting out our predetermined rituals.  In other words, habits govern decision making, and decision making governs our lives.  If our life is a tapestry, in each of us resides a tailor.

The noted American psychologist William James developed a lifelong passion for understanding habits.  “Begin to be now what you will be hereafter.”  James believed that what we are comes from what we do, that what we do is based on habits, and that habits are based on attitude.  However, while various psychologists over the years have taken a variety of approaches to changing habits, it’s only now with sophisticated brain imaging that we are starting to see the neurological impacts of habits, giving us new clues into how to identify and change them.  While the formula still eludes us (you can only learn so much from shocking rats and stuffing them with chocolate), Charles Duhigg has brought us a few steps forward in his book, The Power of Habit:  Why We Do What We Do in Life and Business.

According to one Duke study, over 40% of our day is done on autopilot, like getting dressed, commuting, even our relationships.  While autopilot is the brain’s way of conserving energy, it tends to shut out the present moment and all that it may contain: dangers, opportunities, insights, connections, warnings, and solutions.  Yet we know that neuroplasticity remains with us through our adult years. Which begs the question: If our brains can change, then why is it so hard to erase bad habits?

Duhigg draws on the research from a variety of areas – advertising, sports, addiction, religion and others – to show how habits are created and endure.  We learn about the three-step “habit loop” and how our brain looks for ways to save effort by first looking for “cues” or triggers, followed by a “routine” to follow that is physical, mental or emotional and finally a “reward” that determines if the loop is memorable enough to become a habit.   Duhigg does a fine job of explaining habits, how they work and indeed how to change them.

The more we do something, the less thinking we do – it becomes hard wired into our brains.  Which means using willpower will be insufficient, we’re literally fighting our brain.  To change the behavior, we have to establish a new rut, until it becomes hard wired.  That’s the good news:  Once something becomes hard wired, it’s very hard to change, even if you want to.  The key is doing the thing enough times that it becomes a habit, has created its own rut.  This is called “chunking” – the brain converting a sequence of actions into a routine.

Some habits are incredibly powerful – Duhigg calls them keystone habits – because they seem to trigger a cascade of other habits, which, taken together, can quite literally change everything.  For instance, studies show that families that practice the habit of eating together instill between homework and academic habits in the children.  These key habits are different for everyone, but Duhigg offers guidance for how you can find yours.

The book isn’t perfect.  Duhigg points to habits as the underlying cause for everything from successful marketing campaigns to Super Bowl victories.  While it’s possible that the Indianapolis Colts won the Super Bowl because of habits, a simpler explanation might be that a historically great quarterback was steering the ship.  This isn’t to say that the examples aren’t compelling, just that they should be taken with a grain of salt.

For people looking for a formula to changing your life, this isn’t the book for you.  Says Duhigg, “This book doesn’t contain one prescription.  Rather, I hoped to deliver a framework for understanding how habits work and a guide to experimenting with how they might change.”  So read this book as a way to glean insights into your own life.  And be grateful that, unlike a laboratory rat, you control if your life is filled with sweets or shocks.


Straight Man – Adventures in Academia

I’m new to the book review field, but my impression is that the review should encourage the person to actually read the book.  If true, the books I’ve read most recently seem especially poor choices for possible reviews.  As Jenny can attest, my book reading habits illustrate an interesting masochistic (why won’t this book ever end?!) amnesia (wait a minute, I do like 700-page biographies of a bank).  Of course, with baby #2 due shortly, I can say the same of her.

So I was left to peruse my bookshelves and came across Straight Man, a wonderful novel by Richard Russo.  Best known for his Pullitzer winning novel, Empire Falls, in Straight Man Russo presents us with a novel equal parts tongue-in-cheek comedy and complex personal commentary, the offspring from a late-night rendezvous between Portnoy’s Complaint and Confederacy of Dunces.  Within the first 3 pages I was laughing out loud, repeatedly and uncontrollably.

Our protagonist is William Henry Devereaux, Jr., the interim and reluctant chairman of the English department of West Central Pennsylvania University, a second-rate school in the middle of nowhere.  In the span of a few days, Devereaux will have his nose mangled by an angry poet, imagine his faithful wife is having an affair with his dean, wonder if a curvaceous adjunct is trying to seduce or kill him with peach pits, urge a student to “always understate necrophilia,” and publicly threaten to execute a duck (actually a goose) a day until his department is funded. All this while coming to terms with his brilliant but morally bankrupt father, the dereliction of his youthful promise, and the ominous failure of certain vital body functions.

Straight Man is an amazing read and very well written.  It’s a hilarious expose on the foibles of academia, in particular the red tape and infighting among typical institutional organizations, where “the higher the degree of fighting, the less there is to fight for.”  Yet it transcends mere critique, requiring and facilitating self-reflection.  It shows the desperation that comes with the failure to follow the early arc of a life’s potential and promise, the searing truths about life’s missed opportunities.  Encapsulating this failure, many can relate to Russo’s comment that, “We will make it.  Why this fact should be so discouraging is what I’d like to know.”  But while the book asks sometimes uncomfortable questions, it’s compassionate in softening the blow of answers we don’t like, of the recognition that perhaps it’s the questions and assumptions that are flawed, not our lives.

As he did in Nobody’s Fool, Russo proves a master of depicting the fraught, unvoiced currents that run between parents and children, husbands and wives, friends and colleagues.  In his intelligence, humor, and ability to merge sorrow and farce into a seamless fabric, Richard Russo stands out as a writer of surpassing insight and humanity.

I found myself, at the end of this richly funny book, pondering the nature of comedy and the uses to which we put it. It struck me that the tragic-comic is a kind of default setting of drama, because as flawed humans we can only stand so much tragedy before we short-circuit into irony or farce.  But that makes humor a way of deadening pain, of undercutting it’s power.  No other author is able to effortlessly straddle the line between heartbreak and hilarity.  Perhaps Russo’s greatest gift is to show that we need less a sense of responsibility and more a sense of humor.  In Russo’s world, the tonic for heartache is lightheartedness.


The Emperor of all Maladies: A Biography of Cancer

Few books can combine the eminent readability of a pulp fiction thriller with the penetrating insight of a biography, the precision of biology, the encompassing breadth of history, and the compassion of a cancer clinician.  Like a master alchemist, Siddhartha Mukherjee combines these to produce a work of distilled magnificence – The Emperor of All Maladies, a biography of cancer.

I was a somewhat reluctant reader, wondering if a topic as macabre and frightening as cancer would make a good read.  I wouldn’t, for instance, find a biography of car crashes or parachute failures to be especially interesting.  The difference is that Mukherjee is able to identify an implacable, ever-resourceful protagonist, an anti-hero, and then recount how we’ve been engaged in a 5,000-year struggle to understand and establish supremacy over our own bodies.  From Egyptian hieroglyphics circa 1600 BC (describing a breast cancer and the chilling prognosis:  “None”),  to the almost tragically comedic “insights” of ancient Greece, from nineteenth century recipients of crude radiation and chemotherapy, to the many false leads of the first half of the twentieth century, to the past 20 years of comprehension and progress.

From a  strategy perspective, what I found fascinating was the contrast between the top-down approach to curing cancer vs. the bottom-up approach, which focused on the internal goings-on of the cell.  In the fight against cancer, we see that a blanket spending of billions of dollars had almost no impact on long-term survivability (between 1971 – 1990), but that the science (and prognosis) dramatically improved when researchers started from the ground up, exploring at a cellular level the link between cancer and genes.  Many companies create strategy in the Boardroom with limited understanding of the appropriateness of the strategies given conditions “on the ground.”  Conversely, companies that patiently inform their strategies with careful analysis are better prepared, with a road map for success.

A self-portrait of photographer Heather Perry and her son Finn. In 2005, when five-months pregnant, she was diagnosed with Stage 4 non-Hodgkins lymphoma. Finn was born seven weeks early, and Ms. Perry underwent more than a year of intensive treatment. Both mother and son are thriving in 2010.

But the soul of The Emperor of All Maladies is the author’s recognition that all of the progress and discovery and development come at the cost of human suffering, that the biography of cancer is composed of the mini-biographies of every patient.   “A patient, long before he becomes the subject of medical scrutiny, is, at first, simply a storyteller, a narrator of suffering – a traveler who has visited the kingdom of ill.”

Mukherjee doesn’t promise a cure, and alternates between guarded optimism and resignation.  For every patient who sees sustainable remission, there are others with seemingly identical conditions who fail to respond, for whom palliative care is the best prescription.  The reality is that Cancer may always be with us -the Greek word onkos means “mass” or “burden.”  As Mukherjee writes, “Cancer is indeed the load built into our genome, the leaden counterweight to our aspirations for immortality.”

But onkos comes from the ancient Indo-European nek, meaning to carry the burden: the spirit “so inextricably human, to outwit, to outlive and survive.” Mukherjee has now seen many patients voyage into the night. “But surely,” he writes, “it was the most sublime moment of my clinical life to have watched that voyage in reverse, to encounter men and women returning from that strange country— to see them so very close, ­clambering back.”

While there isn’t yet (and may never be) a happy ending in our fight against cancer, the past 30 years have seen improvements that dwarf what we’d seen in the previous 5,000 years.  We haven’t beaten cancer, but we’re on more equal footing everyday, and it’s now as worried about us as we are about it.

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