Posts Tagged ‘John Gay’
“We use the term risk all too casually, and the term uncertainty all too rarely”*…
How private-equity giants are overhauling the financial system, and its potential impact on pensions…
A decade or so ago private equity was a niche corner of finance; today it is a vast enterprise in its own right. Having grabbed business and prestige from banks, private-equity firms manage $12trn of assets globally, are worth more than $500bn on America’s stockmarket and have their pick of Wall Street’s top talent. Whereas America’s listed banks are worth little more than they were before the pandemic, its listed private-equity firms are worth about twice as much. The biggest, Blackstone, is more valuable than either Goldman Sachs or Morgan Stanley—and has the confidence of a winner. “It’s the alternatives era,” proclaimed the company’s ebullient Taylor Swift-themed festive video in December. “We buy assets then we make ’em better.”
This is not, though, the business that has recently boomed for them. Traditional private equity—using lots of debt to buy companies, improving them, and selling or listing them—has been lifeless. High interest rates have cast doubt on the value of privately held companies and reduced investors’ willingness to provide new funds. It does not seem to matter. Core private-equity activity is now just one part of the industry’s terrain, which includes infrastructure, property and loans made directly to companies, all under the broad label of “private assets”. Here the empire-building continues. Most recently, as we report this week, the industry is swallowing up life insurers.
All of the three kings of private equity—Apollo, Blackstone and KKR—have bought insurers or taken minority stakes in them in exchange for managing their assets. Smaller firms are following suit. The insurers are not portfolio investments, destined to be sold for a profit. Instead they are prized for their vast balance-sheets, which are a new source of funding.
Judged by the fundamentals, the strategy makes sense. Insurance firms invest over long periods to fund payouts, including annuities sold to pensioners. They have traditionally bought lots of government and corporate bonds that are traded on public markets. Firms like Apollo can instead knowledgeably move their portfolios into the higher-yielding private investments in which they specialise. A higher rate of return should mean a better deal for customers. And because insurers’ liabilities stretch years into the future, the finance they provide is patient. In banking, long-term loans are funded with lots of instantly accessible deposits; with private assets and insurance, the duration of the assets matches the duration of the liabilities.
Yet the strategy brings risks—and not just to the firms. Pension promises matter to society. Implicitly or explicitly, the taxpayer backstops insurance to some degree, and regulators enforce minimum capital requirements so that insurers can withstand losses. Yet judging the safety-buffers of a firm stuffed with illiquid private assets is hard, because its losses are not apparent from movements in financial markets. And in a crisis insurance policyholders may sometimes flee as they seek to get out some of their money even if that entails a financial penalty. Last year an Italian insurer suffered just such a bank-run-like meltdown…
Funding pension providers with private equity: “The risks to global finance from private equity’s insurance binge” (gift article) from @TheEconomist.
And lest we think that publicly-funded defined benefit pensions are less risky, see “Akin to Fraud” by Mary Willliams Walsh, an account of the sorry state of the public pension fund in New Hampshire (the state with the second-oldest population in the nation).
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As we rethink retirement, we might recall that it was on this date in 1728 that John Gay‘s The Beggar’s Opera premiered. A “ballad opera” (a satirical work with lyrics set to vernacular music), it was a huge hit– it has been called “the most popular play of the eighteenth century“– a watershed in Augustan drama.
The original idea of the opera came from Jonathan Swift, who wrote to Alexander Pope in 1716 asking “…what think you, of a Newgate pastoral among the thieves and whores there?” Their friend, Gay, decided that it would be a satire rather than a pastoral opera.
In 1928, Bertolt Brecht (working from a translation into German by Elisabeth Hauptmann) adapted the work into Die Dreigroschenoper (The Threepenny Opera) in 1928, sticking closely to the original plot and characters but with a new libretto, and mostly new music by Kurt Weill.
“A Monograph I promised, and a Monograph this shall be”*…
Virginius Dabney wrote the American South’s great postmodern novel. Too bad he did it in 1866…
I found Virginius Dabney in the usual way: which is to say, by accident. I was pawing through a box of antiquarian books when one old volume fell open and a centerfold fell out. Not that: it was a centerfold of sheet music. I cradled the book in my hand and examined the title page
The Story of Don Miff,
As Told by His Friend John Bouche Whacker:
A Symphony of Life.
Edited by Virginius Dabney.
It appeared to be a novel, but as I idly flipped through it, more centerfolds flopped out: sheet music again. I thought for a moment that someone had jammed them in there, but no, they were bound in. Then I began to notice the title of each section of the book. Symphony of Life Movement One. Symphony of Life Movement Two. Symphony of…
The book had a publication date of 1886, just the period I tend to favor, and it bore the imprint of J. B. Lippincott Company, a major publisher. Yet I’d never heard of it or its author. And what was more, most—but not all—of the parts in the orchestral score inserted into the book were blank. The whole thing seemed rather curious. Then I started reading, and it got curioser and curioser.
Don Miff is… well, first let me state that I am reasonably sure that I am correct when I say that Don Miff is the only nineteenth-century novel that is addressed to a tenth-generation descendant living in the twenty-third century. Or that this descendant is Asian-American—because, as the narrator muses, even as the Chinese Exclusion Act of 1882 was coming into force, perhaps “under the contempt expressed for them as inferiors there lurks a secret, unrealized sense of their real superiority?” And even this grandson faces a superior force to himself: women. With mechanization removing the advantages of physical force, Dabney predicts, men and their wearisome violence will become obsolete. Only a few men will be “preserved here and there in zoological gardens of the wealthy and the curious, along with rare specimens of the bison of the prairie, skeletons of the American Indian and the dodo…”—and there his tenth-removed grandson will be exhibited to the inquisitive stares of numberless crowds of women. “You will rue the day when your ancestors, mistaking might for right, excluded woman from that haven of rest, the ballot-box.”
It is to this twenty-third-century Asian-American grandson, a living exhibit in a peaceful matriarchy, that the great Southern novel of 1886 is addressed.
…
Dabney, making his morning commute as a deputy collector at the Customs House downtown, had collapsed unconscious on a bench after climbing the stairs to the El line at Eighteenth and Third. His grown son Noland was by his side, and called for help, but it was too late. Virginius Dabney was due to turn fifty-nine soon, and already lucky to be alive after a previous stroke. But this time, his luck ran out…
Colleagues stood up and recalled how, even though he had only been working there for nine months before dying, old Virginius was one of the most genial men to ever hold the job: a true Southern gentleman. Some of the may have known that, before then, he’d been an editor at the Commercial Advertiser, and that before that he’d run the New-York Latin School for many years. A few might have even have heard that once, eight or nine years ago, their deputy collector had written… something or other.
And that is where history closes its book upon our author. There is no biography of Virginius Dabney: no critical studies of his work, no scholarly papers on the man. Search any database and you will find innumerable hits on “Virginius Dabney,” but these are of his namesake grandson—a Richmond Times-Dispatch editor who won a Pulitzer in 1948 for writing against segregation on city transit lines. Of his dear old granddad, there is nothing.
Why? How could such a forward-looking book have been ignored?
Think back upon one of Dabney’s immediate predecessors at the Customs House. He, too, had written a curious book years before—and, like Dabney, had soon been largely forgotten, and left to toil in obscurity in the downtown warehouses by the late 1880s. His great book was out of print and would stay that way for decades. When he died, he got an even shorter obituary than Dabney did. Apparently nobody cared as much around the Customs House for Mr. Herman Melville.
If we wonder why Don Miff is forgotten, we might also ask—why did it take seventy years for Moby-Dick to be recognized as a masterpiece? Until the 1920s, it was out of print in the United States, and appreciated in the United Kingdom primarily as a maritime tale. It was not until the excavation of Melville by Lewis Mumford and his fellow critics, and the rise of Modernism, that—oh, look! A masterpiece!
Which, of course, it is… now…
Read Emily Dickinson next to other then-famous poets of her time—Tupper, say, or even Longfellow—and her contemporaries look staggeringly old-fashioned. Dickinson is new, spare, prophetic. It is tempting, reading her mysterious and yet intensely personal lines, to think to yourself: My god, it’s as if she knew the future of poetry. But the truth is precisely the opposite; it is because we know the future that the way we read her work is irrevocably altered. The point is not that Emily Dickinson saw the future, but rather, that the future saw her. She appeals to our own aesthetic, and fits in with our notion of a suitable lineage. Had our economic, aesthetic, and political world turned out differently—if, say, heroic socialist odes were the fashion—then Emily Dickinson would have been just another crazy lady in Amherst.
The present catches up to the past: “The Lost Symphony,” from the wonderful Paul Collins (@PaulCollinsPDX) and the good old days of The Believer– eminently worth reading in full.
* Virginius Dabney
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As we look back, we might recall that it was on this date in 1726 that Jonathan Swift’s Travels into Several Remote Nations of the World. In Four Parts. By Lemuel Gulliver, First a Surgeon, and then a Captain of Several Ships— much better known as Gulliver’s Travels— was first published. A satire both of human nature and of the “travelers’ tales” literary subgenre popular at the time, it was (unlike Don Miff) an immediate hit (John Gay wrote in a 1726 letter to Swift that “It is universally read, from the cabinet council to the nursery”). It has, of course, become a classic.
“The heart and soul of the company is creativity”*…
Creativity doesn’t have a deep history. The Oxford English Dictionary records just a single usage of the word in the 17th century, and it’s religious: ‘In Creation, we have God and his Creativity.’ Then, scarcely anything until the 1920s – quasi-religious invocations by the philosopher A N Whitehead. So creativity, considered as a power belonging to an individual – divine or mortal – doesn’t go back forever. Neither does the adjective ‘creative’ – being inventive, imaginative, having original ideas – though this word appears much more frequently than the noun in the early modern period. God is the Creator and, in the 17th and 18th centuries, the creative power, like the rarely used ‘creativity’, was understood as divine. The notion of a secular creative ability in the imaginative arts scarcely appears until the Romantic Era, as when the poet William Wordsworth addressed the painter and critic Benjamin Haydon: ‘Creative Art … Demands the service of a mind and heart.’
This all changes in the mid-20th century, and especially after the end of the Second World War, when a secularised notion of creativity explodes into prominence. The Google Ngram chart bends sharply upwards from the 1950s and continues its ascent to the present day. But as late as 1970, practically oriented writers, accepting that creativity was valuable and in need of encouragement, nevertheless reflected on the newness of the concept, noting its absence from some standard dictionaries even a few decades before.
Before the Second World War and its immediate aftermath, the history of creativity might seem to lack its object – the word was not much in circulation. The point needn’t be pedantic. You might say that what we came to mean by the capacity of creativity was then robustly picked out by other notions, say genius, or originality, or productivity, or even intelligence – or whatever capacity it was believed enabled people to think thoughts considered new and valuable. And in the postwar period, a number of commentators did wonder about the supposed difference between emergent creativity and such other long-recognised mental capacities. The creativity of the mid-20th century was entangled in these pre-existing notions, but the circumstances of its definition and application were new…
Once seen as the work of genius, how did creativity become an engine of economic growth and a corporate imperative? (Hint: the Manhattan Project and the Cold War played important roles.): “The rise and rise of creativity.”
(Image above: source)
* Bob Iger, CEO of The Walt Disney Company
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As we lionize the latest, we might recall that it was on this date in 1726 that Jonathan Swift’s Travels into Several Remote Nations of the World. In Four Parts. By Lemuel Gulliver, First a Surgeon, and then a Captain of Several Ships— much better known as Gulliver’s Travels— was first published. A satire both of human nature and of the “travelers’ tales” literary subgenre popular at the time, it was an immediate hit (John Gay wrote in a 1726 letter to Swift that “It is universally read, from the cabinet council to the nursery”). It has, of course, become a classic.
“Emergencies have always been necessary to progress”*…
The 2008 financial crisis continues to plague the world economy and our politics. It’s also messing with how we understand our narratives of global integration. Until recently, going global implied exuberant stories about one-world connectivity and technocratic togetherness. Now, it’s the other way around: the stories of our times are consumed with collapses, extinctions and doom. It’s a playbook for nativists, who see interdependence as a recipe for catastrophe.
Our big narratives were once capable of more nuance than the pendular swing from euphoria to dysphoria. For every 18th-century Enlightenment story of hope, there was a shadow of decline; in the 19th century, liberals had to joust with conservative and radical prophets of demise. Some even saw crisis as an opportunity. Influenced by Karl Marx, the Austrian economist Joseph Schumpeter in 1942 made a virtue out of ruin. There could be something creative about bringing down tired old institutions. The late German-born economist Albert O Hirschman thought of disequilibria as a potential source of new thinking. In 1981, he distinguished between two types of crisis: the kind that disintegrates societies and sends members scrambling for the exits, and what he called an ‘integrative crisis’, one in which people together imagine new ways forward…
Jeremy Adelman, the Henry Charles Lea professor of history and director of the Global History Lab at Princeton, argues that we should look for opportunities in our travails: “Why we need to be wary of narratives of economic catastrophe.”
See also: “The Three Revolutions Economics Needs.”
* “Emergencies have always been necessary to progress. It was darkness which produced the lamp. It was fog that produced the compass. It was hunger that drove us to exploration. And it took a depression to teach us the real value of a job.” – Victor Hugo
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As we search for silver linings, we might recall that it was on this date in 1728 that John Gay’s The Beggar’s Opera premiered at the Lincoln’s Inn Fields Theatre in London. It ran for 62 consecutive performances, the longest run in English theater history and second longest run in the Western world up to that time (after 146 performances of Robert Cambert’s Pomone in Paris in 1671).
Painting based on scene 11 Act III of The Beggar’s Opera; by William Hogarth, c. 1728 [source]
It could(n’t) be worse…
The Worst Jobs in the World (click here, and again, for larger version).
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As we tote that bale, we might send a Robin Hood-themed birthday card to John Gay; he was born on this date in 1685. A poet, dramatist, and member (with Jonathan Swift, Alexander Pope, and Thomas Parnell) of the Scriblerus Club, Gay is probably best remembered for his 1728 “ballad opera” The Beggars Opera, a story of thieves & highwaymen, which was the basis for Bertolt Brecht’s The Threepenny Opera (though Gay also wrote the libretto for Handel’s Acis & Galatea).
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