1995-96 REVIEW AND OUTLOOK : Everything You Ever Wanted to Read About, or By, Billionaires
In the world of business books, management theories and economic forecasts may come and go but billionaires are never out of style.
At least that’s the conclusion one might reach given the appearance in 1995 of books about Warren Buffett, George Soros and Bill Gates. Two of these were at least partially written by the subjects, which helps make the third one--”Buffett: The Making of an American Capitalist” by Roger Lowenstein (Random House, $27.50)--the class of the field.
“Buffett” joins “Soros on Soros” (John Wiley & Sons, $19.95) and Bill Gates’ “The Road Ahead” (Viking, $29.95) at the head of a typically diverse crop of business books that take on such subjects as the radical changes in corporate America that have turned the very notion of a secure career path on its head and such financial scandals as the Lloyd’s of London affair.
Buffett has been regarded as America’s premier investor for so long that it’s easy to ignore how many points along the way his road to a $12-billion-dollar fortune might have been derailed by a slight protraction of losses in one or another investment.
Lowenstein does not so much puncture the myths surrounding Buffett’s rise as fill them out with clarity and understanding. Although Buffett is known as a long-term “value” investor, only three stocks in his portfolio are “permanent” holdings (Cap Cities/ABC, Washington Post Co., and the insurer Geico). Still, most of the others are held long enough to “profit from the results of the enterprise, as distinct from the price action” beloved of leveraged buyout artists and Wall Street trading desks.
In the opposite corner of the ring from Buffett is Soros, the currency and securities trader who made $1 billion forecasting the collapse of the British pound in 1992--and lost a reported $600 million by missing the upturn in U.S. interest rates two years later.
That “Soros on Soros” does not have the narrative drive of “Buffett” is unsurprising, given that it is written as a series of dialogues between the investor and his largely admiring questioners. (Question: “The press . . . just can’t believe that you’re doing what you’re doing for altruistic motives alone. It’s almost unique in human experience.”)
Still, buried within the stultifying format are some fascinating nuggets. Soros explains his shorting the pound in 1992 by saying that he knew the pound was about to fall out of the European exchange rate mechanism after hearing a speech by the head of the German Bundesbank, Helmut Schlesinger.
Schlesinger, who as the European Community’s central banker was bound to defend all the member currencies, hinted in the speech that he did not regard the ECU, or European Currency Unit, as entirely sound.
“He said he liked [the ECU] as a concept but he didn’t like the name,” Soros writes. “He would have preferred it if it were called the mark. I got the message.”
Then there is Gates. “The Road Ahead” is not about him personally, but about his vision for the future, which turns out to resemble something one might find in a Tintin comic strip. Gadgetry abounds; instead of Tintin’s little submarines and secret potions, Gates offers wallet PCs and interactive houses that turn on the lights and Muzak as you move down the hallway.
Gates’ thinking about the implications of a world dominated by technology is a little disingenuous. He’ll spend paragraphs lovingly detailing the ability of data collectors to record every human’s daily activities before adding dutifully: “I find the prospect of documented lives a little chilling, but some people will warm to the idea.”
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The best antidote to rampaging Gatesism can be found in a 1995 book that is unafraid to wear its heart on its dust jacket: “Silicon Snake Oil: Second Thoughts on the Information Highway” by Clifford Stoll (Doubleday, $29.95).
Stoll is an astrophysicist whose first book, “The Cuckoo’s Egg,” recounted his implacable search for a European hacker who was invading his computer system. The experience seems to have left him with a permanent sense of the shallowness of technological “progress.”
Stoll sees the computer as a trap that slows information, deadens it, and flattens the experience of life into a monotone. In his book, Gates promotes his database of millions of digitized art images; Stoll wonders if the effort is worth the candle.
“Aside from the technical inaccuracies of reproducing art on a computer, I find it disconcerting to view a work of art in the same place that I read nasty arguments on the Usenet. Going to a museum is an escape from daily tasks and a step into another world,” Stoll writes.
Entry to another world is what many American investors in Lloyd’s of London syndicates thought they were buying when they placed their capital in what seemed to be a risk-free investment. As recently as 1958, there were only 4,000 investors, or “names,” all of them British; by the time Lloyd’s agents had finished marketing its cachet around the world, there were 33,000, including 3,000 Americans--many of them recruited after the enterprise’s leaders knew they were facing $13 billion in losses from asbestos claims and other costly disasters.
As she recounts in “Risky Business: An Insider’s Account of the Disaster at Lloyd’s of London” (Scribner, $25), Elizabeth Luessonhop was the ex-wife of a Washington neurosurgeon when friends enticed her to invest in an ill-fated Lloyd’s syndicate.
Luessenhop’s publishers paired her with veteran business writer Martin Mayer. Mayer claims in a preface that most of the interviewing was hers, but it is easy to believe that he provided the book with the hard edge that barely balances Luessenhop’s ditsy “charm.” (“I was invited to my first-ever proper English country wedding,” she writes, “an experience every woman should have.”) Together they spin a fascinating tale of insiders plotting to shear thousands of all-too-willing sheep.
No list of 1995 business books would be complete without mentioning three that open the debate on the new American workplace and its discontents.
In “The End of Work” (G.P. Putnam’s Sons, $24.95), veteran economic trend-spotter Jeremy Rifkin chronicles how productivity gains and technological advances have jeopardized the jobs of millions of middle-class workers and middle managers.
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Rifkin suggests that growing masses of the unemployed and disenfranchised will present a growing political threat, particularly if the profits produced by the information revolution are hoarded by the elite. “Chances are that the growing gap between the haves and have-nots will lead to social and political upheaval on a global scale,” Rifkin says.
A more down-to-earth but no less pessimistic view of the U.S. economy’s recent past is embodied in “The End of Affluence” (Random House, $22) by business journalist Jeffrey Madrick. Madrick’s provocative thesis is that slow-growth economic policies dating back to the Carter administration have deprived the U.S. of $12 trillion in wealth.
That, he argues, is how much more the country would have produced if its growth rate had not declined to an average of 2.3% a year from 1973 to 1993 from its 3.4% average annual growth rate from the Civil War to the 1970s. The shrinkage of growth helps account for ungenerous anti-immigrant policies, the rolling back of welfare, the rise in credit card debt, and the stagnation of capital investment.
“As our material expectations are disappointed, our new social, political, and religious movements become increasingly exclusionary, intolerant, and uncompromising,” he writes.
The process of going from have to have-not is described in “Executive Blues: Down and Out in Corporate America” (Franklin Square Press, $21.95), by a former newspaperman and corporate public relations director named G.J. Meyer. Meyer was downsized out of a job in 1991 and spent the next four years in an embittering and frightening hell of outplacement and headhunting, gaining and losing a succession of public relations and advertising posts, meeting some of the same people on the way down he knew on the way up.
“It frightens me to see the kinds of corporations that used to hire people like me eliminating more and more of the kinds of jobs that people like me used to have. The fact that I’m 50 years old scares the hell out of me. I barely feel grown up, never mind over-the-hill.”
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EXCERPTS
From ‘Soros on Soros’
“I don’t need access for business purposes. I made my career without hobnobbing with the rich and powerful and now that I can hobnob, I don’t have the time for it.”
From Gates’ ‘The Road Ahead’
“Ultimately, the information highway is not for my generation or those before me. It is for future generations. The kids who have grown up with PCs in the last decade, and those who will grow up with the [information] highway in the next, will push the technology to its limits.”
From ‘Buffett’
“On Wall Street, his homespun manner made him a cult figure.... He never forgot that underneath each stock and bond, no matter how arcane, there lay a tangible, ordinary business.”
