Posts Tagged ‘Al Capone’
“Humanity is actually much more cooperative and empathic than given credit for”*…
We looked earlier at the shrinking away of public companies in the U.S., both as a product of consolidation (of operations and of ownership) and of the (potentially dangerous) growth, in their stead, of private equity. University of Michigan professor Jerry Davis has a more optimistic take…
Public corporations have been dominant institutions in the American economy since the dawn of the 20th century. Whether due to their greater efficiency or power, listed corporations spread across nearly all industries. “Capitalism” in America was synonymous with “corporate capitalism,” and the number of exchange-listed companies grew with the size of the economy.
Yet since the late 1990s, the number of listed corporations has dropped by half in the US, underwritten by new technologies that lower the cost of assembling an enterprise. Meanwhile, neglected alternatives to the public corporation both old (e.g., mutuals, cooperatives) and new (e.g., open source, platform coops) have proven surprisingly durable. Given the manifest pathologies of shareholder capitalism, the combination of these two trends may suggest pathways out of our current dilemma…
[David explains how both consolidation among listed companies and the rise of private equity have contributed to this drop, but then raises a third, more general explanation…]
A more encompassing interpretation is that information and communication technologies (ICTs) have drastically changed the basic economic calculus of what an enterprise looks like and how it might be funded. In the US context, this has meant that companies prefer “buy” to “make,” as transaction cost enthusiasts might describe it. I coined the term Nikefication to describe the process of vertical dis-integration that reconfigured American industry during the 1990s and 2000s and the options it opens for alternative forms of enterprise, described in detail in previous books…
The vertical dis-integration of the American economy was driven by Wall Street and enabled by ICTs. Ironically, the result is that the capital requirements to create and scale a business can be much lower, reducing the rationale to go public in the first place. Indeed, IPO prospectuses routinely convey that the point of the IPO is not to raise capital, but to create a market for the company’s shares to enable VCs and employees to cash out – which is not the most persuasive pitch to potential buyers, and perhaps helps account for the disastrous post-IPO performance of most new listings.
The asset-lite model means fewer public companies, but it also suggests new possibilities for non-corporate forms that may be more human-scale and democratic. Nike’s profit-driven, asset- and employee-lite model is not the only option enabled by new technologies.
By “noncorporate” I mean forms of economic organization that are not owned by outside shareholders, although they may be legally organized as a corporation. These include mutuals (where consumers or members are also the owners); cooperatives (where workers, producers, or consumers are the owners); municipal enterprises (where citizens or governments own the enterprise); nonprofits; and open source projects. These forms are far more prevalent than one might expect, and in some cases they dominate their industry (e.g., property insurance, server software).
Noncorporate forms of enterprise have proven surprisingly resilient in the US. The Fortune 500 list for 2022 includes at least a dozen mutual insurance companies, including State Farm (#44), New York Life (#71), and Nationwide (#83). The single largest shareholder of over 350 of the 1000 largest American corporations is Vanguard—also a mutual. Land o’ Lakes (#213) is an agricultural cooperative owned by its producer-members, as are Ocean Spray and Blue Diamond. Ace Hardware is a retail cooperative in which local stores can be attuned to local needs and tastes yet gain the economies of scale of a large-scale brand. Jessica Gordon Nembhard’s brilliant book Collective Courage documents that cooperative forms thrived in African-American communities for generations – often overlooked by those who find data about the economy solely through online databases. And the US is home to nearly 5000 credit unions, which by law are not-for-profits, owned by their members.
Stanford Law professor Ron Gilson once quipped that if shareholders didn’t exist, they would have to be invented. That’s not quite true: plenty of American enterprises do quite well without shareholders. Indeed, civilization itself might be better without them. As I have written elsewhere, “nearly every major societal pathology in the West today – certainly in the USA – is caused or exacerbated by profit-oriented corporations,” including the opioid epidemic, the obesity crisis, the return of nicotine addiction among the young, democracy-undermining social media, and a climate catastrophe underwritten by the fossil fuel industry. Shareholder capitalism may be a suicide pact. Conversely, cooperatives are inherently democratic and accountable…
Institutional alternatives to public corporations are well-established in the US, and in some cases they lead their industry, such as mutuals in finance and insurance. But cooperatives have historically been thin on the ground here compared to Europe. According to the Democracy At Work Initiative, there were 612 worker cooperatives in 2021 –a 30% increase over 2019, but still a tiny number.
Perhaps the digital revolution has finally created the conditions for cooperatives to thrive. Research from the pre-digital era suggests that one of the factors limiting cooperatives is, for want of a better term, the transaction costs of democracy. A lot of workers’ time spent in meetings to engage in dialogue, debate, and polling is a price that corporate dictatorships don’t have to bear. But newer tools have dramatically reduced the transaction costs of democracy: the same smartphones that enable pervasive corporate surveillance also allow worker voice at scale on a continuous basis.
It is not just transaction costs that have declined: the required assets to start a business are also much cheaper now to own or rent. Capital equipment such as Computer Numerical Control tools, powered by software, gets better and cheaper much the same way other software-powered tools do. (Compare the price of a color laser printer in 1990 to one today.) This is also true of the software required to run an enterprise. It is possible to buy a knockoff version of the enterprise software underlying the Uber app for under $10,000 – and the Drivers Coop in New York is creating a version to “franchise” the locavore driver-owned coop alternative to Uber. The ICTs that dis-integrated the corporate economy have opened space for noncorporate alternatives that might be more democratic and human-scaled.
There are reasons for optimism here. Platform cooperatives merge the benefits of coops with accessible technology, and have been especially effective in industries in which the required new capital investment is low (home cleaning, home health aides, transit). Trebor Scholz’s new book Own This! provides details on the opportunities here. Municipally- or cooperative-owned fabrication facilities can enable enterprises with limited capital to launch and thrive. If the required investment to start a business is low, then the range of alternative institutions, including coops, is correspondingly larger.
The technologies exist to create low-cost alternatives to public corporations. Maybe we are not stuck with the legacy of 20th century corporate capitalism after all…
An optimistic (and aspirational) take on what might follow the economic reign of the public company: “Is This the End of Corporate Capitalism?” from @vanishingcorp via @iftf.
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As we ponder proprietorship, we might recall that, on this date in 1933 the hospitality industry got a boost as Congress ratified the 21st Amendment to the U.S. Constitution– repealing the 18th Amendment, which had prohibited the manufacture, transportation, and sale of alcohol. Prohibition had gone into effect in 1920 in an effort to reduce crime and improve public health, but it had backfired: despite massive public investment in enforcement, there was a sharp rise in organized crime (c.f.: bootleggers like Al Capone stepping in to supply black market booze) and the emergence of a “scofflaw” attitude on the part of a public that wanted its alcohol.
“If you want the truth — I know I presume — you must look into the technology of these matters”*…
The estimable Alan Jacobs on why we’re all going nuts online…
On January 6, 2021, Samuel Camargo posted a video on Instagram showing him struggling to break through a police barrier to get into the U.S. Capitol building. The next day he wrote on Facebook: “I’m sorry to all the people I’ve disappointed as this is not who I am nor what I stand for.”
A month after the riot, Jacob Chansley, the man widely known as the QAnon Shaman, wrote a letter from his jail cell in Virginia asking Americans to “be patient with me and other peaceful people who, like me, are having a very difficult time piecing together all that happened to us, around us, and by us.”
“This is not who I am,” “all that happened … by us” — it is commonplace to hear such statements as mere evasions of responsibility, and often they are. But what if they reflect genuine puzzlement, genuine difficulty understanding one’s behavior or even seeing it as one’s own, a genuine feeling of being driven, compelled, by something other than one’s own will?…
There follows a consideration of Augustine, Foucault, Pynchon, Paul, Dostoevsky, Zadie Smith, Dawkins, Auden, Joesph Heller, and others, on the topic of why we succumb to what Augustine called curiositas: “Something Happened By Us: A Demonology,” from @ayjay in @tnajournal. Eminently worth reading in full.
* Thomas Pynchon, Gravity’s Rainbow
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As we examine exorcism, we might recall that it was on this date in 1986 that Geraldo Rivera opened “Al Capone’s Vault”…
Notorious and “most wanted” gangster, Al Capone, began his life of crime in Chicago in 1919 and had his headquarters set up at the Lexington Hotel until his arrest in 1931. Years later, renovations were being made at the hotel when a team of workers discovered a shooting-range and series of connected tunnels that led to taverns and brothels making for an easy escape should there be a police raid. Rumors were spread that Capone had a secret vault hidden under the hotel as well. In 1985, news reporter Geraldo Rivera had been fired from ABC after he criticized the network for canceling his report made about an alleged relationship between John F. Kennedy and Marilyn Monroe. It seemed like a good time for Rivera to scoop a new story to repair his reputation. It was on this day in 1986 that his live, two-hour, syndicated TV special, The Mystery of Al Capone’s Vault aired. After lots of backstory, the time finally came to reveal what was in that vault. It turned out to be empty. After the show, Rivera was quoted as saying “Seems like we struck out.”
source
“Horse sense is the thing a horse has which keeps it from betting on people”*…
Still, people do an awful lot of betting. Legal sports betting currently runs at almost $77 Billion per year in the U.S. and is growing by double digits; last year, 40 percent of people aged 18 to 44 gambled online (sports and casino wagering combined), nearly double the 21 percent of those aged 45 to 54. Illegal gambling (for understandable reasons, harder to gauge) is estimated at (at least) $1.7 Trillion globally, and also on the rise (in part because it’s such a handy way to launder money).
As football season gets underway, Jeopardy! champ (and gambler) James Holzhauer considers the ways in which a sports wagerer is like a stock market investor…
The sports betting marketplace has many parallels to the world of finance: both are essentially populated with speculators trying to make money by outsmarting everyone else. Some sportsbook conglomerates have even been run by people with experience on Wall Street. But how do the two compare side by side? Let’s look at some key similarities and differences between the two modes of investing…
Diversification, insider trading, derivatives, inflation concerns: “How sports betting and the stock market compare,” from @James_Holzhauer in @TheAthletic.
(Image above: source)
* W.C. Fields
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As we punt, we might recall that it was on this date in 1930 that Al “Scarface” Capone enlisted former rivals into partnership to form a giant co-operative organization to control the beer/spirits, vice, and gambling “industries” in Chicago. The Syndicate, as it was known, was headed by Capone and run by a cabinet, with each member controlling different areas of the business: alcohol sales, alcohol running, gambling, vice, and war on those outside the Syndicate.
The following year, Capone was charged with tax evasion; in 1932 he was convicted and sentenced to the Federal Penitentiary in Atlanta; in 1934 he was transferred to Alcatraz.
“The truth is rarely pure and never simple”*…
For a century, the idea of truth has been deflated, becoming terrain from which philosophers fled. Crispin Sartwell argues that they must return – urgently…
It is often said, rather casually, that truth is dissolving, that we live in the ‘post-truth era’. But truth is one of our central concepts – perhaps our most central concept – and I don’t think we can do without it. To believe that masks prevent the spread of COVID-19 is to take it to be true that they do. To assert it is to claim that it is true. Truth is, plausibly, central to thought and communication in every case. And, of course, it’s often at stake in practical political debates and policy decisions, with regard to climate change or vaccines, for example, or who really won the election, or whom we should listen to about what.
One might have hoped to turn to philosophy for a clarification of the nature of truth, and maybe even a celebration of it. But philosophy of pragmatist, analytic and continental varieties lurched into the post-truth era a century ago. If truth is a problem now for everyone, if the idea seems empty or useless in ‘the era of social media’, ‘science denialism’, ‘conspiracy theories’ and suchlike, maybe that just means that ‘everyone’ has caught up to where philosophy was in 1922…
[Sartwell sketches the last 100 years of philosophy, and it’s undermining of the very idea of truth.]
I don’t think, despite all the attacks on the notion by all sorts of philosophers for a good century, that we’re going to be able to do without truth. In a way, I don’t think all those attacks touched truth at all, which (we’re finding) is necessary, still the only possible cure…
As a first step… we might broaden the focus from the philosophical question of what makes a sentence or proposition true or false to focus on some of the rich ways the concept of truth functions in our discourse. That love is true does not mean that it is a representation that matches up to reality. It does not mean that the love hangs together with all the rest of the lover or lovee’s belief system. It doesn’t mean that the hypothesis that my love is true helps us resolve our problems (it might introduce more problems). It means that the love is intense and authentic, or, as I’d like to put it, that it is actual, real. That my aim is true does not indicate that my aim accurately pictures the external world, but that it thumps the actual world right in the centre, as it were.
Perhaps what is true or false isn’t only, or even primarily, propositions, but loves and aims, and the world itself. That is, I would like to start out by thinking of ‘true’ as a semi-synonym of ‘real’. If I were formulating in parallel to Aristotle, I might say that ‘What is, is true.’ And perhaps there’s something to be said for Heidegger’s ‘comportment’ after all: to know and speak the real requires a certain sort of commitment: a commitment to face reality. Failures of truth are, often, failures to face up. Now, I’m not sure how much that will help with mathematics, but maths needs to understand that it is only one among the many forms of human knowledge. We, or at any rate I, might hope that an account that addresses the traditional questions about propositional truth might emerge from this broader structure of understanding. That is speculative, I admit.
Truth may not be the eternal unchanging Form that Plato thought it was, but that doesn’t mean it can be destroyed by a few malevolent politicians, tech moguls or linguistic philosophers, though the tech moguls and some of the philosophers (David Chalmers, for instance) might be trying to undermine or invent reality, as well. Until they manage it, the question of truth is as urgent, or more urgent, than ever, and I would say that despite the difficulties, philosophers need to take another crack. Perhaps not at aletheia as a joy forever, but at truth as we find it, and need it, now…
On why philosophy needs to return of the question of truth: “Truth Is Real,” from @CrispinSartwell in @aeonmag.
Source of the image above, also relevant: “The difference between ‘Truth’ and ‘truth’.”
* Oscar Wilde
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As we wrestle with reality, we might recall that it was on this date in 1986 that Geraldo Rivera opened “Al Capone’s Vault”…
Notorious and “most wanted” gangster, Al Capone, began his life of crime in Chicago in 1919 and had his headquarters set up at the Lexington Hotel until his arrest in 1931. Years later, renovations were being made at the hotel when a team of workers discovered a shooting-range and series of connected tunnels that led to taverns and brothels making for an easy escape should there be a police raid. Rumors were spread that Capone had a secret vault hidden under the hotel as well. In 1985, news reporter Geraldo Rivera had been fired from ABC after he criticized the network for canceling his report made about an alleged relationship between John F. Kennedy and Marilyn Monroe. It seemed like a good time for Rivera to scoop a new story to repair his reputation. It was on this day in 1986 that his live, two-hour, syndicated TV special, The Mystery of Al Capone’s Vault aired. After lots of backstory, the time finally came to reveal what was in that vault. It turned out to be empty. After the show, Rivera was quoted as saying “Seems like we struck out.”
source
“When I consider Life, ’tis all a cheat”*…
Sarah Howe’s early life is mostly a mystery. There are no surviving photographs or sketches of her, so it’s impossible to know what she looked like. She may, at one point, have been married, but by 1877 she was single and working as a fortune-teller in Boston. It was a time of boom and invention in the United States. The country was rebuilding after the Civil War, industrial development was starting to take off, and immigration and urbanization were both increasing steadily. Money was flowing freely (to white people anyway), and men and women alike were putting that money into the nation’s burgeoning banks. In 1876, Alexander Graham Bell invented the telephone, and in 1879 Thomas Edison created the lightbulb. In between those innovations, Sarah Howe opened the Ladies’ Deposit Company, a bank run by women, for women.
The company’s mission was simple: help white women gain access to the booming world of banking. The bank only accepted deposits from so-called “unprotected females,” women who did not have a husband or guardian handling their money. These women were largely overlooked by banks who saw them — and their smaller pots of money — as a waste of time. In return for their investment, Howe promised incredible results: an 8 percent interest rate…
All told, the Ladies Deposit would gather at least $250,000 from 800 women — although historians think far more women were involved. Some estimate that Howe collected more like $500,000, the equivalent of about $13 million today…
Then, in 1880, it all came crashing down. On September 25, 1880, the Boston Daily Advertiser began a series of stories that exposed Howe’s bank as a fraud. Her 8 percent returns were too good to be true. Howe was operating what we now know as a Ponzi scheme — 40 years before Ponzi would try his hand at it…
Rose Eveleth on the fascinating story of a 19th-century scammer, and what she can teach us about women, lying, and economic boom-and-bust cycles: “The No. 1 Ladies’ Defrauding Agency.”
* Aureng-Zebe
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As we remind ourselves that what’s too good to be true usually isn’t, we might recall that it was on this date in 1946 that FBI agents arrested Chicago gangster George “Bugs” Moran in Kentucky.
During the Prohibition era, Moran was one of the biggest organized crime figures in America, and has been credited with popularizing the drive-by shooting. He was a rival to Al Capone, who gunned down seven members of Moran’s gang in the 1929 Saint Valentine’s Day massacre.
Unlike Capone, Moran wasn’t a clever crime boss. By 1946 he had been reduced to common crimes like bank heists. He was basically penniless. The FBI found him renting an upstairs apartment from a law-abiding couple in Henderson, Ky. [source]
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