Apple Inc. prides itself on selling devices rather than re- lying on ads. Now the iPhone maker is looking to expand its digital- advertising business, people familiar with the matter said, as it shifts its growth strategy beyond selling devices toward pushing services on them. Over the past year, Apple has met with Snap Inc., Pinter- est Inc. and other companies about participating in an Ap- ple network that would dis- Please turn to page A4 BY TRIPP MICKLE AND GEORGIA WELLS BERBERA, Somaliland—The battle for hegemony in the Middle East is playing out at an ancient African port where tra- ditional dhow fishing boats now share space with giant, container ships loaded around the clock by men in yellow high- visibility vests. Berbera, in the breakaway republic of Somaliland, is perched on a narrow ship- ping lane leading to the Suez Canal and is just 260 nautical miles from Yemen’s civil war. Since antiquity, the town’s stra- tegic shore has been coveted by military and maritime powers. Described by colo- nial-era travelers as the “key to the Red Sea,” the port became an Ottoman stronghold and later a British colonial outpost. That explains why United Arab Emir- ates, Saudi Arabia’s strongest ally, pledged close to $450 million to take Please turn to page A12 BY MATINA STEVIS-GRIDNEFF roger federer WSJ. MAGAZINE THE OVERPROTECTED AMERICAN CHILD The jobless rate in May fell to 3.8%, the lowest since April 2000, as the U.S. job expansion continued to a record 92 months. A1 The Dow added 219.37 points to 24635.21 on the jobs report, recouping most of its losses for the week. B1 Apple is looking to expand its digital-ad business as it shifts its growth strategy be- yond selling devices toward pushing services on them. A1 Fiat Chrysler laid out a five-year vision that focuses on meeting demand for SUVs and trucks and invest- ing in future technologies. B3 U.S. auto sales rose in May as demand for SUVs and pickup trucks contin- ued to buoy results. B3 Consumers in parts of the U.K. and Europe couldn’t use Visa cards for much of Friday due to a system failure. B12 Sanofi said the average price for its drugs fell 8.4% in the U.S. last year after accounting for rebates. B3 Deutsche Bank’s credit rating was downgraded one notch by S&P to BBB+. B12 Federal investigators are examining stock trades tied to the ex-CEO of Heartland Pay- ments ahead of its sale. B12 What’s News CONTENTS Books..................... C7-12 Business News...... B3 Food......................... D5-6 Heard on Street...B14 Obituaries................ A11 Opinion.............. A13-15 Sports........................ A16 Style & Fashion D2-4 Technology............... B6 Travel ...................... D7-8 Weather................... A16 Wknd Investor....... B5 World News.... A6-10 > Inside NOONAN A15 We Must Improve Our Trust T rump said a summit with North Korean leader Kim will proceed on June 12 as first planned, after the president met with a top Kim aide. A1 The White House is plan- ning for a potential meeting between Trump and Rus- sian President Putin. A1 U.S. trade negotiators pressed China for long-term purchase pacts as they pre- pared for weekend talks. A6 The EU launched a WTO challenge to U.S. steel and aluminum tariffs and vowed duties on U.S. exports. A6 Spanish lawmakers voted to oust Prime Minis- ter Rajoy, ushering in a cen- ter-left government. A9 A former CIA analyst’s appointment as Bolton’s chief of staff has sparked criticism because of his con- troversial views of Islam. A4 U.S. strikes against Syr- ian chemical-weapons sites this spring didn’t need con- gressional approval, the Justice Department said. A4 The IRS plans to spend $291 million updating com- puter systems to help it im- plement the new tax law. A3 The Energy Department is proposing a new plan to bail out failing nuclear and coal-fired power plants. A3 World-Wide Business & Finance s 2018 Dow Jones & Company, Inc. All Rights Reserved WSJ THE WALL STREET JOURNAL WEEKEND. ******** SATURDAY/SUNDAY, JUNE 2 - 3, 2018 ~ VOL. CCLXXI NO. 128 WSJ.com HHHH $5.00 school diploma fell in May to 5.4%—near a record low. The jobless rates for blacks and La- tinos are also near record lows. Jackie Brunka dropped out of high school in 2010, and even though she later earned a GED, she felt employers looked Please turn to page A2 thing but right in the sweet spot,” said Dan North, chief economist at business insurer Euler Hermes North America. “There is tremendous demand for labor right now.” And those gains are extend- ing to all corners of the labor market. The unemployment rate for women, at 3.6% last month, was the lowest since 1953, when a far smaller share of women sought jobs. The jobless rate for workers older than 24 without a high- April 2000, the Labor Depart- ment said. The last time the rate was lower was in 1969. At the same time, U.S. em- ployers added 223,000 jobs last month, extending the lon- gest continuous job expansion on record to 92 months. Average hourly earnings edged up 2.7% from a year ear- lier—and raises were even stronger for rank-and-file than managers. “It’s pretty hard to argue that the labor market is any- WASHINGTON—Americans traditionally left behind as jobs and wages grow—high- school dropouts, blacks and Latinos—are reaping the bene- fits of a tightening labor mar- ket, with an unemployment rate that hasn’t been lower in nearly half a century. The jobless rate in May ticked down to a seasonally adjusted 3.8%, the lowest since BY ERIC MORATH AND SARAH CHANEY Jobs Engine Finds New Gear During much of the current expansion, job creation lagged behind in industries with the strongest wage growth. But wage gains in some lower-paying fields, such as hospitality, have begun to accelerate, reflecting a tightening job market for lower-skilled workers. 5 10 15 20% 5 10 15 20 25% Source: Labor Department Max Rust/THE WALL STREET JOURNAL. Note: Seasonally adjusted U.S. employers have added jobs every month since the fall of 2010, the longest such streak on record. Change in wages since September 2010 Change in jobs since September 2010 Manufacturing $26.90 an hour 12.7M jobs Education/ Health $26.90 an hour 23.6M jobs Leisure/ Hospitality $15.86 an hour 16.3M jobs Business Services $32.18 an hour 20.9M jobs Construction $29.65 an hour 7.2M jobs Upward Mobility Information Average wages in May: $39.40 an hour Employment in May: 2.8 Million jobs Financial Activities $34.77 an hour 8.6M jobs Trade/Transport/ Utilities $23.24 an hour 27.8M jobs Private sector total $26.92 an hour 126.3M jobs Mideast Rivals Target New Regions Billions are being invested in Horn of Africa ports and military bases Early Trump tweet about report is faulted....................... A2 Heard: Jobs and trade make a bitter brew for business... B14 EXCHANGE NEW WEEKEND SECTION HOW AMAZON WINS Fans Await ‘Thriller’ From Punning Judge i i i Tax ruling on Michael Jackson’s estate is a literary event voices of the 20th century. “The Jackson opinion could be his magnum opus,” says Randy Herndon, a former clerk. To close watchers of the Tax Court, a Holmes opinion is instantly recognizable, open- ing not with a recitation of relevant statutes and prece- dents but with a simple story. “The tax law is so complex that anyone who tries to make it accessible should be lauded,” said Andy Grewal, a University of Iowa law profes- sor. Here’s how Judge Holmes began a 2016 opinion in a case revolving around the dwin- Please turn to page A11 WASHINGTON—Mark Holmes writes pithy tales of failed marriages and booming businesses, weaving in F. Scott Fitzgerald, historical digres- sions and groan-aloud puns. Now he’s working on a much-anticipated thriller (get it?) about the late pop super- star Michael Jackson. Mr. Holmes is no best-sell- ing author. In fact, his work is free. Mr. Holmes is a federal judge known for the clear, col- loquial writing style he brings to arcane rulings on the U.S. Tax Court. He’s handling the final phases of the hugely compli- BY RICHARD RUBIN cated court case stemming from Mr. Jackson’s estate-tax return. An unusual combina- tion of music fans and tax nerds is anticipating the end of the five-year court battle, and Mr. Holmes is poised to apply his distinctive voice to one of the most recognizable Apple Eyes Push Into Digital Ads Cargo in Berbera, where U.A.E.’s DP World spent $442 million to take over the port. North Korea Summit Back On WASHINGTON—President Donald Trump said his on- again, off-again summit with North Korean leader Kim Jong Un will proceed in Singapore on June 12 as initially planned, another dramatic turn in a diplomatic saga that has veered from threats of nuclear showdown to talk about peace over a matter of days. Mr. Trump’s reversal on Friday followed an extraordi- nary Oval Office meeting with North Korean Gen. Kim Yong Chol, one of Mr. Kim’s top lieutenants and a former spy- master who has been sanc- tioned by the U.S. Treasury for his role in cyberattacks against American companies. Gen. Kim received a special ex- emption from the sanctions to travel to Washington to hand- deliver a letter to Mr. Trump. The letter, from Kim Jong Un, expresses the North Ko- rean leader’s interest in meet- ing Mr. Trump without making any significant concessions or threats, according to a foreign government official briefed on the contents. Speaking to reporters out- Please turn to page A8 BY MICHAEL C. BENDER REVIEW U.S. Plans For Trump Meeting With Putin WASHINGTON—The White House is planning for a poten- tial summit between President Donald Trump and President Vladimir Putin of Russia, ac- cording to people familiar with the efforts, a meeting that would bring to the international stage one of the world’s most enigmatic political relationships. A senior administration offi- cial said Friday that Jon Hunts- man, the U.S. ambassador to Russia, has been in Washington to help arrange a meeting be- tween Messrs. Trump and Putin. The planning is still at an early stage, the official said, with the two nations needing to agree on a date and location. “This has been an ongoing project of Ambassador Hunts- man, stretching back months, of getting a formal meeting be- tween Putin and Trump,” the of- ficial said. Any meeting between the two presidents would be ex- pected to include discussions on Syria, Ukraine and nuclear-arms control. The summit’s purpose would be to resolve longstand- ing differences, people familiar with the matter said. The summit would mark the third meeting between Messrs. Please turn to page A6 BY BRETT FORREST AND PETER NICHOLAS .
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Apple Inc. prides itself onselling devices rather than re-lying on ads.
Now the iPhone maker islooking to expand its digital-advertising business, peoplefamiliar with the matter said,as it shifts its growth strategybeyond selling devices towardpushing services on them.
Over the past year, Applehas met with Snap Inc., Pinter-est Inc. and other companiesabout participating in an Ap-ple network that would dis-
PleaseturntopageA4
BY TRIPP MICKLEAND GEORGIA WELLS
BERBERA, Somaliland—The battle forhegemony in the Middle East is playingout at an ancient African port where tra-ditional dhow fishing boats now sharespace with giant, container ships loadedaround the clock by men in yellow high-visibility vests.
Berbera, in the breakaway republic ofSomaliland, is perched on a narrow ship-ping lane leading to the Suez Canal andis just 260 nautical miles from Yemen’scivil war. Since antiquity, the town’s stra-tegic shore has been coveted by militaryand maritime powers. Described by colo-nial-era travelers as the “key to the RedSea,” the port became an Ottomanstronghold and later a British colonialoutpost.
That explains why United Arab Emir-ates, Saudi Arabia’s strongest ally,pledged close to $450 million to take
PleaseturntopageA12
BY MATINA STEVIS-GRIDNEFF
roger federer
WSJ. MAGAZINE
THEOVERPROTECTEDAMERICAN CHILD
� The jobless rate in Mayfell to 3.8%, the lowestsince April 2000, as the U.S.job expansion continued toa record 92 months. A1� The Dow added 219.37points to 24635.21 on thejobs report, recouping mostof its losses for the week. B1�Apple is looking to expandits digital-ad business as itshifts its growth strategy be-yond selling devices towardpushing services on them.A1� Fiat Chrysler laid out afive-year vision that focuseson meeting demand forSUVs and trucks and invest-ing in future technologies. B3� U.S. auto sales rose inMay as demand for SUVsand pickup trucks contin-ued to buoy results. B3�Consumers in parts of theU.K. and Europe couldn’t useVisa cards formuch of Fridaydue to a system failure. B12� Sanofi said the averageprice for its drugs fell 8.4%in the U.S. last year afteraccounting for rebates. B3�Deutsche Bank’s creditrating was downgraded onenotch by S&P to BBB+. B12� Federal investigators areexamining stock trades tied tothe ex-CEO of Heartland Pay-ments ahead of its sale. B12
What’sNews
CONTENTSBooks..................... C7-12Business News...... B3Food......................... D5-6Heard on Street...B14Obituaries................ A11Opinion.............. A13-15
Sports........................ A16Style & Fashion D2-4Technology............... B6Travel ...................... D7-8Weather................... A16Wknd Investor....... B5World News.... A6-10
>
InsideNOONAN A15
We MustImproveOur Trust
Trump said a summit withNorth Korean leader Kim
will proceedonJune 12 as firstplanned, after the presidentmet with a top Kim aide. A1� TheWhite House is plan-ning for a potential meetingbetween Trump and Rus-sian President Putin. A1�U.S. trade negotiatorspressed China for long-termpurchase pacts as they pre-pared for weekend talks. A6� The EU launched a WTOchallenge to U.S. steel andaluminum tariffs and vowedduties on U.S. exports. A6� Spanish lawmakersvoted to oust Prime Minis-ter Rajoy, ushering in a cen-ter-left government. A9�A former CIA analyst’sappointment as Bolton’schief of staff has sparkedcriticism because of his con-troversial views of Islam. A4�U.S. strikes against Syr-ian chemical-weapons sitesthis spring didn’t need con-gressional approval, theJustice Department said. A4� The IRS plans to spend$291 million updating com-puter systems to help it im-plement the new tax law. A3� The Energy Departmentis proposing a new plan tobail out failing nuclear andcoal-fired power plants. A3
World-Wide
Business&Finance
s 2018 Dow Jones & Company, Inc.All Rights Reserved
WSJTHEWALL STREET JOURNALWEEKEND.
* * * * * * * * SATURDAY/SUNDAY, JUNE 2 - 3, 2018 ~ VOL. CCLXXI NO. 128 WSJ.com HHHH $5 .00
school diploma fell in May to5.4%—near a record low. Thejobless rates for blacks and La-tinos are also near recordlows.
Jackie Brunka dropped outof high school in 2010, andeven though she later earned aGED, she felt employers looked
PleaseturntopageA2
thing but right in the sweetspot,” said Dan North, chiefeconomist at business insurerEuler Hermes North America.“There is tremendous demandfor labor right now.”
And those gains are extend-ing to all corners of the labormarket. The unemploymentrate for women, at 3.6% lastmonth, was the lowest since1953, when a far smaller shareof women sought jobs.
The jobless rate for workersolder than 24 without a high-
April 2000, the Labor Depart-ment said. The last time therate was lower was in 1969.
At the same time, U.S. em-ployers added 223,000 jobslast month, extending the lon-gest continuous job expansionon record to 92 months.
Average hourly earningsedged up 2.7% from a year ear-lier—and raises were evenstronger for rank-and-file thanmanagers.
“It’s pretty hard to arguethat the labor market is any-
WASHINGTON—Americanstraditionally left behind asjobs and wages grow—high-school dropouts, blacks andLatinos—are reaping the bene-fits of a tightening labor mar-ket, with an unemploymentrate that hasn’t been lower innearly half a century.
The jobless rate in Mayticked down to a seasonallyadjusted 3.8%, the lowest since
BY ERIC MORATHAND SARAH CHANEY
Jobs Engine Finds NewGear
During much of the current expansion, job creation lagged behind in industries with the strongest wage growth. Butwage gains in some lower-paying fields, such as hospitality, have begun to accelerate, reflecting a tightening jobmarket for lower-skilled workers.
5
10
15
20%
5 10 15 20 25%
Source: Labor DepartmentMax Rust/THEWALL STREET JOURNAL.
Note: Seasonally adjusted
U.S. employers have addedjobs every month since thefall of 2010, the longestsuch streak on record.
Change inwages sinceSeptember2010
Change in jobs since September 2010
Manufacturing$26.90 an hour12.7M jobs
Education/Health$26.90 an hour23.6M jobs
Leisure/Hospitality$15.86 an hour16.3M jobs
BusinessServices$32.18 an hour20.9M jobs
Construction$29.65an hour7.2M jobs
Upward Mobility
InformationAverage wages inMay: $39.40 an hourEmployment in May:2.8 Million jobs
FinancialActivities$34.77 an hour8.6M jobs
Trade/Transport/Utilities$23.24 an hour27.8M jobs
Private sector total$26.92 an hour126.3M jobs
Mideast Rivals Target New RegionsBillions are being invested in Horn of Africa ports and military bases
� Early Trump tweet aboutreport is faulted....................... A2
� Heard: Jobs and trade make abitter brew for business... B14
EXCHANGENEW WEEKEND SECTION
HOW AMAZON WINS
Fans Await ‘Thriller’ From Punning Judgei i i
Tax ruling on Michael Jackson’s estate is a literary event
voices of the 20th century.“The Jackson opinion could
be his magnum opus,” saysRandy Herndon, a formerclerk.
To close watchers of theTax Court, a Holmes opinion isinstantly recognizable, open-ing not with a recitation ofrelevant statutes and prece-dents but with a simple story.
“The tax law is so complexthat anyone who tries to makeit accessible should belauded,” said Andy Grewal, aUniversity of Iowa law profes-sor.
Here’s how Judge Holmesbegan a 2016 opinion in a caserevolving around the dwin-
PleaseturntopageA11
WASH INGTON—Ma r kHolmes writes pithy tales offailed marriages and boomingbusinesses, weaving in F. ScottFitzgerald, historical digres-sions and groan-aloud puns.
Now he’s working on amuch-anticipated thriller (getit?) about the late pop super-star Michael Jackson.
Mr. Holmes is no best-sell-ing author. In fact, his work isfree. Mr. Holmes is a federaljudge known for the clear, col-loquial writing style he bringsto arcane rulings on the U.S.Tax Court.
He’s handling the finalphases of the hugely compli-
BY RICHARD RUBIN
cated court case stemmingfrom Mr. Jackson’s estate-taxreturn. An unusual combina-tion of music fans and taxnerds is anticipating the endof the five-year court battle,and Mr. Holmes is poised toapply his distinctive voice toone of the most recognizable
Apple EyesPush IntoDigitalAds
Cargo in Berbera, where U.A.E.’s DP World spent $442 million to take over the port.
NorthKoreaSummitBack On
WASHINGTON—PresidentDonald Trump said his on-again, off-again summit withNorth Korean leader Kim JongUn will proceed in Singaporeon June 12 as initially planned,another dramatic turn in adiplomatic saga that hasveered from threats of nuclearshowdown to talk about peaceover a matter of days.
Mr. Trump’s reversal onFriday followed an extraordi-nary Oval Office meeting withNorth Korean Gen. Kim YongChol, one of Mr. Kim’s toplieutenants and a former spy-master who has been sanc-tioned by the U.S. Treasury forhis role in cyberattacksagainst American companies.Gen. Kim received a special ex-emption from the sanctions totravel to Washington to hand-deliver a letter to Mr. Trump.
The letter, from Kim JongUn, expresses the North Ko-rean leader’s interest in meet-ing Mr. Trump without makingany significant concessions orthreats, according to a foreigngovernment official briefed onthe contents.
Speaking to reporters out-PleaseturntopageA8
BY MICHAEL C. BENDER
REVIEW
U.S. PlansFor TrumpMeetingWith Putin
WASHINGTON—The WhiteHouse is planning for a poten-tial summit between PresidentDonald Trump and PresidentVladimir Putin of Russia, ac-cording to people familiar withthe efforts, a meeting thatwould bring to the internationalstage one of the world’s mostenigmatic political relationships.
A senior administration offi-cial said Friday that Jon Hunts-man, the U.S. ambassador toRussia, has been in Washingtonto help arrange a meeting be-tween Messrs. Trump and Putin.
The planning is still at anearly stage, the official said,with the two nations needing toagree on a date and location.
“This has been an ongoingproject of Ambassador Hunts-man, stretching back months, ofgetting a formal meeting be-tween Putin and Trump,” the of-ficial said.
Any meeting between thetwo presidents would be ex-pected to include discussions onSyria, Ukraine and nuclear-armscontrol. The summit’s purposewould be to resolve longstand-ing differences, people familiarwith the matter said.
The summit would mark thethird meeting between Messrs.
PleaseturntopageA6
BY BRETT FORRESTAND PETER NICHOLAS
.
�
每日免费获取报告1、每日微信群内分享5+最新重磅报告；
2、每日分享当日华尔街日报、金融时报；
3、每周分享经济学人
4、每月汇总500+份当月重磅报告
（增值服务）
扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。
A2 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * * THEWALL STREET JOURNAL.
U.S. NEWS
The number of pendingcases in U.S. immigrationcourts has increased by nearly150,000—a 26% jump—sincePresident Donald Trump tookoffice. A Page One article onMay 24 about the courts in-correctly said the increase wasmore than 150,000 and a 25%jump.
The opening date of theMuseum of Ice Cream’s Pint
Shop was changed to June 6from June 3 after the June is-sue of WSJ. Magazine went toprint.
JAB Holding Co.’s deal tobuy Dr Pepper SnappleGroup Inc. is expected toclose this year. A Page One ar-ticle on March 8 about JAB in-correctly implied in one refer-ence that JAB already owns DrPepper.
Readers can alert The Wall Street Journal to any errors in news articles byemailing [email protected] or by calling 888-410-2667.
CORRECTIONS � AMPLIFICATIONS THE WALL STREET JOURNAL(USPS 664-880) (Eastern Edition ISSN 0099-9660)(Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241)Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036Published daily except Sundays and general legal holidays.Periodicals postage paid at New York, N.Y., and other mailing offices.Postmaster: Send address changes to The Wall Street Journal,200 Burnett Rd., Chicopee, MA 01020.All Advertising published in The Wall Street Journal is subject to the applicable rate card, copies ofwhich are available from the Advertising Services Department, Dow Jones & Co. Inc., 1211 Avenue ofthe Americas, New York, N.Y. 10036. The Journal reserves the right not to accept an advertiser’s order.Only publication of an advertisement shall constitute final acceptance of the advertiser’s order.Letters to the Editor: Fax: 212-416-2891; email: [email protected]
NEED ASSISTANCE WITH YOUR SUBSCRIPTION?By web: customercenter.wsj.com; By email: [email protected] phone: 1-800-JOURNAL (1-800-568-7625); Or by live chat at wsj.com/livechat
REPRINTS & LICENSINGBy email: [email protected]; By phone: 1-800-843-0008
GOT A TIP FOR US? SUBMIT IT AT WSJ.COM/TIPS
EarlyTrumpTweetOnReport IsFaulted
President Donald Trumptweeted about the May jobs re-port before its release Friday, inan unusual break from decadesof protocol.
About an hour before the La-bor Department released a re-port showing the unemploymentrate had fallen to its lowest levelsince April 2000, Mr. Trump saidon Twitter he was “looking for-ward” to seeing the figures.
The president had beenbriefed on the numbers Thurs-day evening, but they hadn’tyet been made public. Long-
standing rules on sensitive eco-nomic data call for executivebranch officials to withholdcomment for at least an hourafter figures are released.
While Mr. Trump didn’t giveany details on the data in histweet, investors appeared to takehis early comment as a signalthat the data would be strong.
“The implication was certainlythere that he was expecting agreat number, and it affected themarket,” said Peter Hug, globaltrading director at Kitco Metals.“I can’t believe he did that.”
The White House receivesthe jobs report and other majoreconomic indicators before theirpublic release, but officials “areresponsible for assuring that
there is no release prior to theofficial release time,” according toa White House Office of Man-agement and Budget directive.
Lawrence Kudlow, director ofthe National Economic Counciland the president’s chief eco-nomic adviser, dismissed a furorin markets over the president’stweet. “All these traders need tosee a shrink,” he said. “People arereally overthinking this.”
But former government offi-cials and private-sector econo-mists were critical of the tweet.“The advance info is sacrosanct—not to be shared,” tweeted AriFleischer, former press secretaryfor President George W. Bush.
—Ben Leubsdorfand Nick Timiraos
School WorkUnemployment rate byeducational attainment, age 25and over
THEWALL STREET JOURNAL.Source: Labor Department
Note: Seasonally adjusted
0
5
10
15%
2000 ’101996
Less than H.S.High school
Some collegeCollege
down upon her lack of a tradi-tional diploma.
She worked at a fast-foodrestaurant and two differentgas stations between longspells without a job. But inMarch, the 25-year-old landeda job as a front-office coordi-nator at an Express Employ-ment Professionals branch inBuffalo, N.Y. She is earning thehighest wages of her career.
“I’m able to take my daugh-ter to places that we couldn’tafford before, so we can go tothe zoo on the weekend,” Ms.Brunka said. “It’s definitelyopened up a lot of doors.”
President Donald Trump,who had been briefed on therosy employment figuresThursday night, moved mar-kets Friday morning before thereport’s public release when hetweeted that he was “lookingforward” to the data. Mr.Trump’s tweet broke with de-cades of protocol by whichWhite House officials refrainedfrom publicly commenting onsuch market-sensitive data be-fore their release.
The yield on the benchmark10-year Treasury note and theWSJ Dollar Index both rose af-ter the tweet and then movedhigher after the report was re-leased. Stock futures didn’tmove significantly on the pres-ident’s tweet, but stocks roseFriday. The Dow industrialsadded 219 points, or 0.9%. TheS&P 500 rose 1.1%, while theNasdaq Composite added 1.5%.
The pace of overall wagegains has been modest. Butwages for rank-and-file work-ers are improving. Nonsupervi-sor wages rose 2.8% in May
ContinuedfromPageOne
Today, TheWall StreetJournal islaunching acompletelyreimagined
way for our readers to con-sume their business news byintroducing an all-newweekend edition in printand online.
We know the weekend isan opportunity to deepenour bond with readers, whoexperience The Wall StreetJournal in a different way:deeper, more wide-ranging,more for pleasure than obli-gation. Since 2010, we’vemet that need with our pop-ular Review and Off Dutysections.
Now we are moving ourcore subject matter, busi-ness and finance, into thatweekend mode. We’re un-veiling a new section calledExchange, with powerful vi-sual presentation, addictiverecurring features, agenda-setting regular columnists,and deep reporting that illu-minates the behind-the-scenes stories and people ofthe week’s biggest businessand finance news.
At the same time, we arecommitted to our principalmission of covering thenews. You’ll continue to seenational and internationalnews in our A section, andbusiness and finance newsin our new Exchange sec-tion. While we’re expandingour business coverage in Ex-change, we aren’t makingany cuts to the depth, rangeor quantity of news we offeron Saturday.
WSJ Weekend is alreadythe #1 weekend newspaperin America with coveragethat our readers look for-ward to and enjoy. We hopeour additional offerings to-day will make The WallStreet Journal even morevaluable.
For more information,visit weekend.wsj.com, andplease do share yourthoughts at [email protected].
Gerard BakerEditor in ChiefThe Wall Street Journal
DearReader,
THE NUMBERS | By Jo Craven McGinty
Williams Highlights Rankings FlawIt’s hard to
imagine a listof the besttennis playersin the worldthat doesn’t
include Serena Williams.But the woman whose ag-
gressive game has scared thebejeezus out of opponentsfor more than 20 years wasranked an abysmal 453 goinginto the French Open, whereshe is competing unseeded.
That lowly position meansMs. Williams might have tobattle a top-ranked player inthe early rounds of the tour-nament, making it more dif-ficult for her—or, for thatmatter, her opponent—to ad-vance.
Ms. Williams beat the70th-ranked Kristyna Plisk-ova in straight sets on Tues-day and on Thursday, sheknocked out 17th seed Ash-leigh Barty. She next faces11th seed Julia Goerges.
Furious fans called foul be-cause before giving birth inSeptember, Ms. Williams, whohas won 23 Grand Slam sin-gles titles, was ranked No. 1and most recently had
others, particularly theplayer in the 32 spot, AlizéCornet,” said StephanieKovalchik, a senior data sci-entist with the Game InsightGroup of Tennis Australia.
Rather than make an ex-ception, Dr. Kovalchik andother sports data scientistsbelieve the WTA ranking sys-tem should be completelyoverhauled, and for reasonsother than pregnancy.
Currently, women earnWTA rankings by accu-mulating points in the
preceding 52 weeks, countingonly the 16 best resultsamong tour-level events. (Themen’s Association of TennisProfessionals counts the 18best results.)
The most points are of-fered by Wimbledon andthe Australian, Frenchand U.S. opens. A singleswinner in one of thoseGrand Slam tournamentsearns 2,000 points. A fi-nalist captures 1,300points. A semifinalist gets
780 points. Fewer points areawarded for lower-tier tour-naments and for earliereliminations.
Having been away fromtennis for 14 months whileon maternity leave, Ms. Wil-liams had played in only
two tournaments in thepreceding 52 weeks,
earning a total of 75 points.In contrast, No. 1-ranked
Simona Halep played 18tournaments in the past 52weeks, with her best 16 earn-ing her 7,270 points.
The WTA ranking systemrewards players for keepingup a regular schedule anddoing well at the events theyenter, Dr. Kovalchik said, butit ignores opponent difficultywhen scoring a player’smatch results.
“A player would get thesame number of points forbeating the world No. 100 inthe first round of a tourna-ment as they would for beat-ing the world No. 1, eventhough the latter is a muchmore impressive result,” Dr.Kovalchik said.
Players with special cir-cumstances, like Ms. Wil-liams’s childbirth or RogerFederer’s skipping the claycourt season to focus onother tournaments, are pe-nalized, even though thosechoices may have no bearingon their ability.
And on occasion, the sys-tem has led to puzzling rank-ings, such as a 67-week pe-riod when CarolineWozniacki was No. 1 despiteat the time having neverwon a Grand Slam.
Dr. Kovalchik and
other sports statisticians ad-vocate switching to a rankingsystem that would accountfor difficulty and perhapsnot punish players as harshlyfor taking a hiatus.
One popular option is Elo, arating system originally devel-oped to rate player strengthin chess tournaments.
FiveThirtyEight hasadapted Elo to calculate theskill level of tennis playersbased on career wins andlosses with the ratings up-dated at the end of eachmatch using a probability-based formula that gives moreweight to recent performancesand credits wins against moredifficult opponents.
When Dr. Kovalchikapplied a variationof the algorithm to
the French Open, includingan “absence” adjustment forplayers who hadn’t competedfor more than 90 days of theregular season, Ms. Williamsplaced 22nd in the world onclay—noticeably better than
her 400-plusWTA rankingand a better re-flection of herability.
Ms. Wil-liams isn’tthe only pro-
fessional to re-turn to tennis af-
ter giving birth. Atleast half a dozen other
professionals have done so.Kim Clijsters came back in2009, 18 months after givingbirth, when she competed inthe Cincinnati Masters as awild card. A month later, stillunranked, she won the U.S.Open.
Evonne Goolagong wonWimbledon in 1980, threeyears after the birth of herfirst child. And MargaretCourt won the AustralianOpen, French Open and U.S.Open in 1973, the year afterher first child was born. Ms.Court didn’t retire perma-nently until 1977, after becom-ing pregnant with her fourth.
The WTA didn’t respond toquestions about its ratingssystem other than to reiterateits existing rules. But giventhe outcry over Ms. Williams,the organization, after apregnant pause, may feelcompelled to at least recon-sider how women should beranked following childbirth.
from a year earlier, the bestannual gain since mid-2009.
In the first quarter of thisyear, median weekly earningsfor Americans without a high-school diploma rose by 10%from a year earlier, separate La-bor Department data showed.That compared with 0.5% annualgrowth for college graduates.
“When employers run out ofworkers, that’s when peoplewith the weakest bargainingpositions get put in thedriver’s seat and can negotiatefor better pay and get them-selves into roles,” said AndrewChamberlain, chief economistat recruiting site Glassdoor.
Strong hiring implies eco-nomic growth can acceleratethis year, after increasing at amodest 2.2% annual pace in thefirst quarter. Forecasting firmMacroeconomic Advisersslightly raised its forecast forsecond-quarter output gains toa 4.1% rate after the jobs report.
The employment report bol-sters the view of Federal Re-serve officials who favor moreincreases in short-term inter-est rates in order to keep theeconomy from overheating.
The central bank is on trackto next boost rates at its June12-13 meeting. Inflation hasfirmed this year, and many of-ficials believe falling unem-ployment will fuel faster wageand price increases.
The historically low unem-ployment rate, however, mayoverstate the strength of thelabor market, said DianeSwonk, chief economist at ac-counting and consulting firmGrant Thornton LLP.
“This is not your father’s3.8% unemployment rate,” shesaid, noting that economicconditions are different fromthe last time joblessness wasso low. In the spring of 2000,wages and the economy weregrowing significantly faster. Abroader measure of unemploy-ment and underemploymentthat includes Americans stuckin part-time jobs or too dis-
couraged to look was 6.9%.Last month, it was 7.6%.
And a smaller share ofAmericans are working orseeking work today than whenthe unemployment rate waslast this low. That partly re-flects that the share of womendoing so—which grew for 50years up until 2000—has de-clined in the past decade.
The tight labor market iscausing Timberline Total Solu-tions, an Omaha, Neb., callcenter, to get more creative to
attract workers without esca-lating wages: The company al-lows employees to largely picktheir own schedule.
“We’ve gotten a lot of feed-back that people need the flex-ibility to take a day off, orleave early to help their sonwith homework,” said MitchKampbell, vice president of op-erations.
Mr. Kampbell said the flexi-bility helps attract workers for$11.50- to $14-an-hour jobs.Timberline has held starting
wages steady in the past year,but it offers a bonus of asmuch as $2 an hour for em-ployees who work 85% of theirhours during the company’sbusiest periods.
Silent-Aire LP, which buildscommercial air-conditioningsystems in Gilbert, Ariz., hasbeen losing workers to thebooming construction industryin the Phoenix area. That hascaused the company to mod-estly increase wages, about 3%from last year, and boost ben-
efits, said Mario Scrivano, vicepresident of human resources.
“Turnover numbers arehigher than anticipated,” Mr.Scrivano said.
To combat that, Silent-Aireis hiring lower-skilled, lower-paid workers and graduallytraining them for expandedroles, such as plumbers andelectricians.
“We realized that every as-pect of our work doesn’t re-quire someone to have a skilllevel of 10,” he said.
won the Australian Openwhile pregnant.
Theoretically, French Openofficials could have seededher based on that previousstanding but instead opted tofollow the convention of posi-tioning players in the drawbased on their WTA Tourrankings, as is its custom.
While fans are irked atthe incongruity of Ms. Wil-liams’s ranking given herability, to do otherwisewould have created just asmuch turmoil.
If they were to make anexception for Ms. Williams,“it could be seen as unfair to
Jobs EngineFinds NewGear
Order on the CourtThe top five ranked women onthe WTA tour would havedifferent positions under an Eloranking system that takesabsences into account.
THEWALL STREET JOURNAL.
Source: Stephanie Kovalchik, TennisAustralia's Game Insight Group
Simona Halep
Caroline Wozniacki
Garbine Muguruza
Elina Svitolina
Jelena Ostapenko
1
2
3
4
5
2
3
11
1
13
WTA ranking Elo ranking
.
�
THEWALL STREET JOURNAL. * * * * * * * Saturday/Sunday, June 2 - 3, 2018 | A3
other Republican rival, stateAssemblyman Travis Allen.
National Republicans, in-cluding Mr. Trump, are weigh-ing in to boost Mr. Cox, withthe president writing on Twit-ter that he looks forward to
“working with him to MakeCalifornia Great Again!”
Mr. Trump is anathemaamong Democrats in thisdeeply blue state. But he re-mains popular among manyRepublican voters, who tend
to have higher turnout thanDemocrats in the state’s non-presidential elections.
On Friday, Republicans re-ceived more daunting newsabout their statewide pros-pects, with a report from the
California secretary of stateshowing that Republicansmade up 25.1% of registeredvoters, compared with 25.5% ofvoters who listed “No PartyPreference,” while Democratsmade up 44.4% of the tally.
U.S. NEWS
Party leaders are betting thatif they can get Mr. Cox into theNovember election, his presencewill help drive Republicans tothe polls, preserving their na-tional congressional majority.House Majority Leader KevinMcCarthy, who is from Bakers-field, Calif., has orchestrated thepush to unite behind Mr. Cox.
The three leading Democratshave split support from electedofficials and Democratic groupsin California. Notably, U.S. Sen.Kamala D. Harris is campaign-ing with Mr. Newsom, whileformer Republican gubernato-rial candidate Meg Whitman,who was chief executive ofeBay Inc. and Hewlett Packard,has endorsed Mr. Villaraigosa.Teachers unions are backingMr. Newsom, while proponentsof charter schools, includingNetflix CEO Reed Hastings,support Mr. Villaraigosa.
Mr. Newsom has seized onthe president’s endorsement asan opportunity to focus on Mr.Cox in the hopes of avoiding ashowdown with another Demo-crat, particularly Mr. Villarai-gosa.
And Mr. Newsom has arguedthat a battle between two Dem-ocrats in November would be acostly general-election battlethat would weaken the party.
Bill Whalen, a research fel-low at the Hoover Institutionand an aide to former CaliforniaRepublican Gov. Pete Wilson,said that while it seems like aforegone conclusion that a Dem-ocrat will succeed Mr. Brown,the down-ballot implications ofthe primary race are critical.
“In terms of the House, thisis incredibly important be-cause of the question of whois at the top of the ticket,” hesaid of the gubernatorial race.“And if the Republicans get abeachhead on the gubernato-rial side, that in theory shouldincrease turnout down theticket and help Republicans’chances in House races.”
FRESNO, Calif.—Primaryvoters head to the polls in Cal-ifornia on Tuesday to eliminateall but two of 27 contestantsvying to succeed outgoingDemocratic Gov. Jerry Brown,in a race that could havebroader implications for con-gressional contests here.
Mr. Brown, 80 years old,will be termed out of officenext year after eight years asgovernor of the nation’s mostpopulous state. He served twoterms in the 1970s, as well. Heis leaving the governorship ata moment when the state, un-der his leadership, has cast it-self as one of the most vocalopponents to many of Presi-dent Donald Trump’s policies.
Given Democrats’ over-whelming statewide advantagein voter registration, expertsexpect a Democrat to prevailin November. However, thestate’s quirky top-two primarysystem could send two Demo-crats to a runoff, leaving theGOP with no statewide stan-dard-bearer. That, in turn,could damp Republican turn-out as the GOP seeks to holdseveral U.S. House seats here,while setting the stage for abattle between different fac-tions of California Democrats.
Polls have consistentlyshown Lt. Gov. Gavin Newsom,a Democrat and former SanFrancisco mayor, with a com-fortable lead.
Recent polls show Republi-can businessman John Cox insecond place. He is ahead oftwo Democrats—former LosAngeles Mayor Antonio Vil-laraigosa and State TreasurerJohn Chiang—as well as an-
BY ALEJANDRO LAZO
National Parties Watch California RaceCampaign to succeedBrown as governorlooms over state’scongressional races
Clockwise, from top left, Republican John Cox, Democratic Lt. Gov. Gavin Newsom, Treasurer John Chiang and ex-L.A. Mayor Antonio Villaraigosa.
TOPLEFT:B
ILLCLARK
/CONGR
ESSIONALQUA
RTERLY/ZUM
APR
ESS;ALEJANDR
OLAZO
/THEWALL
STREET
JOUR
NAL(3)
WASHINGTON—The Inter-nal Revenue Service plans tospend $291 million updating140 computer systems to helpit implement the new tax law,according to a previously un-disclosed agency document.
Those information-technol-ogy costs and other back-of-fice operations will consumemore than 90% of the moneyCongress is giving the IRS forimplementation. The IRS isalso bracing for a 17% increasein phone calls, planning to re-vise 450 forms and publica-tions and organizing 40,000hours of training, according tothe document.
Earlier this year, Congressreserved $320 million of theIRS’s $11.4 billion budget forimplementing the tax law.Without that boost, total fund-ing would have gone down,continuing a trend since Re-publicans won the House in2010 that has caused the taxagency to shed employees andreduce the frequency of audits.
The $320 million, availablethrough Sept. 30, 2019, wascontingent on the IRS submit-ting this spending plan toCongress. The National Tax-payer Advocate, an indepen-dent entity inside the IRS, saidearlier this year that the IRSwill need $495 million overtwo years for implementation.
The law, which was enactedin December, made the far-thest-reaching changes to theU.S. tax system since 1986,lowering tax rates, limiting taxbreaks and restructuring theway the U.S. taxes multina-tional companies.
The tax law altered long-standing features of the busi-ness and individual tax codesthat were programmed into theIRS systems that receive andanalyze tax returns. Preparingfor the new law—especially thetax-filing season that starts inJanuary 2019—requires re-vamping those systems.
IRS information-technologyefforts have struggled foryears, most recently on the in-dividual tax-filing deadlinethis April when a failure pre-vented the agency from pro-cessing returns and forced aone-day extension.
BY RICHARD RUBIN
IRS PlansMassiveTechnologyUpgrade
that connects 64 groups in 49states, providing support onthis and other campaigns.
The pending Supreme Courtcase was filed by a child-sup-port worker in Illinois againstthe American Federation ofState, County and MunicipalEmployees.
Mark Janus, who is repre-sented by attorneys at the Lib-erty Justice Center and theNational Right to Work LegalDefense Foundation, said bar-gaining with public agencies isinherently political and a man-datory $45-a-month fee paid
to the union violates his FirstAmendment rights.
The high court, with a 5-4conservative majority, is ex-pected to rule in his favorwithin the next several weeks.
Such a ruling could allow anestimated five million govern-ment workers in 22 states tostop paying so-called agencyfees, the portion of union reve-nue that funds collective bar-gaining. Workers have theright in all states to declineunion membership or pay fullunion dues.
Twenty-eight states have
passed right-to-work laws,which allow workers to avoidpaying agency fees. The cur-rent battle is around heavilyunionized states in the Mid-west and along the coasts thatdon’t have right-to-work laws.
A ruling that favors Mr.Janus could result in the lossof 726,000 union membersover several years, the left-leaning Illinois Economic Pol-icy Institute said in a May re-port. “It could be quite aradical change,” said RobertBruno, a professor at the Uni-versity of Illinois at Urbana-
Champaign, who co-wrote thereport.
Lee Saunders, president ofAfscme, which represents 1.3million public-sector workers,called the case a “blatant po-litical attack” by groups thatwant to weaken unions. Theunion is asking its members tosign cards that commit themto paying dues in the future.
The American Federation ofTeachers has contacted800,000 teachers in 10 statesand persuaded 237,000 to signrecommitment cards that arelegally binding in some states,said Randi Weingarten, presi-dent of the 1.8 million-memberunion.
The wave of teacher walk-outs across several states thisyear indicated growing sup-port among teachers for theirunions, Ms. Weingarten said.
Keith Williams, a recentlyretired high-school Englishteacher in New Oxford, Pa., ishelping start a campaignaimed at informing the state’s330,000 public employees howthey can avoid paying unionfees following a Janus ruling.
“Our role is to make surepeople know what their rightsare,” said Mr. Williams.
Justin Baker, a public-school custodian in Bellwood,Pa., said the threat posed bysuch efforts has galvanized thesupport at his SEIU local of 27custodians, secretaries andcafeteria workers. “At somepoint, you’re going to need theunion,” Mr. Baker said.
As organized labor bracesfor a Supreme Court rulingthat could make it easy forpublic-sector workers to stoppaying some dues, unionsacross the country are reach-ing out to hundreds of thou-sands of members to persuadethem to keep paying dues.
The Service Employees In-ternational Union has sent textmessages to 800,000 membersas part of a program that in-cludes meeting with workersand sending mailers to homes.
“We have a goal of speakingto every union member andgetting them to recommit tothe union,” said SEIU Presi-dent Mary Kay Henry. Roughlyhalf of its two million mem-bers are public-sector workers,she said.
At the same time, conserva-tive groups in Illinois, Michi-gan, Ohio and Pennsylvania arealerting workers how to optout of dues. They are gather-ing the names and addressesof tens of thousands of stateand local workers throughpublic-records requests. Thegoal is a political-style cam-paign using direct mail, phonecalls and home visits.
“There is a subset of unionworkers that feel like they arebeing used and are forced topay unions that don’t repre-sent their interest,” said CarrieConko, a spokeswoman for theState Policy Network, a lim-ited-government nonprofit
BY KRIS MAHER
Unions Court Own Members Ahead of Ruling
A boom in natural-gas pro-duction and renewable powerhas lowered prices and forcedcoal and nuclear competitorsout of business, a trend Mr.Trump has promised to slow.He pledged during his presi-dential campaign to help coalminers in particular, and hereceived millions of dollars incampaign donations from coal-company executives. In recentmonths, he has prodded En-ergy Secretary Rick Perry tocraft a solution and did soagain in a statement Friday.
“Unfortunately, impendingretirements of fuel-securepower facilities are leading to arapid depletion of a criticalpart of our nation’s energy mixand impacting the resilience ofour power grid,” Sarah Sand-ers, the White House press sec-retary, said in a statement,
adding that the presidentwants Mr. Perry “to prepareimmediate steps” in response.
Mr. Trump’s efforts so farhave been blocked by the Fed-eral Energy Regulatory Com-mission and fought by a broadcoalition of opponents.
The country’s largest gridoperator is also skeptical. “Ouranalysis…has determined thatthere is no immediate threatto system reliability,” PJM In-terconnection LLC, whichruns power markets in 13states across the mid-Atlanticand Midwest, said in a state-ment. “There is no need forany such drastic action.”
The administration cameunder pressure to help thisspring when Ohio-based utilityFirstEnergy Corp.’s fleet ofcoal- and nuclear-power plantsfiled for bankruptcy and asked
the Energy Department foremergency intervention.
Opponents say these types ofplans undermine the competi-tion in power markets that haslowered prices and that theycould raise consumer costs bybillions of dollars in an attemptto fight a problem that may notmaterialize. Those groups, in-cluding consumer advocates,the oil-and-gas lobby, and re-newable-power companies, saidFriday the newest proposal cre-ates the same concerns.
“The Administration’s planto federalize the electricpower system is an exercise incrony capitalism taken solelyfor the benefit of a bankruptpower-plant owner and itscoal supplier,” said MalcolmWoolf, who oversees policy atAdvanced Energy Economy, atrade group representing busi-
ness consumers.The administration’s newest
proposal is in a 40-page memoobtained by The Wall StreetJournal and reported on Thurs-day by Bloomberg. The memo isdated May 29 and labeled as adraft addendum to a largerpackage submitted to the Na-tional Security Council. Thecouncil is working with the En-ergy Department on new poli-cies to help the nuclear- andcoal-power industries, and itisn’t clear when they might fin-ish a plan or how many otheroptions are under consideration.
Most of the memo outlinespotential risks to the grid andlays out a legal rationale forthe plan. It doesn’t specifyhow the obligation to buypower from mandated, oftenmore expensive suppliers,would work.
WASHINGTON—The EnergyDepartment is proposing a newplan to bail out failing nuclearand coal-fired power plants byforcing grid operators to takethe electricity they produce, amove that could upend com-petitive power markets andraise prices for consumers.
The plan—a draft now underWhite House review—isn’t thefirst attempt by President Don-ald Trump’s administration tohelp coal and nuclear busi-nesses. Its goal is to stop a waveof plant closings for two yearswhile the Energy Departmentstudies which plants nationwideare critical to ensuring reliablepower in case of an attack ornatural disaster. Administrationofficials say grid reliability is anational-security issue.
BY TIMOTHY PUKO
EnergyDepartmentMoves toAssistNuclear, Coal PlantsTeachers have demonstrated for raises this year, but a Supreme Court ruling could hit their unions.
CAITLINPENNA/EPA
/SHUTTER
STOCK
.
�
A4 | Saturday/Sunday, June 2 - 3, 2018 P W L C 10 11 12 H T G K B F A M 1 2 3 4 5 6 7 8 9 O I X X * * * * * * * * THEWALL STREET JOURNAL.
seeking new sources ofgrowth. Google launched itshigh-end Pixel smartphone in2016 to compete with theiPhone. And Facebook is push-ing into hardware with plansfor a smart speaker that wouldcompete with Apple’s Home-Pod, Google Home and Ama-zon.com Inc.’s suite of Alexa-powered Echo speakers,according to a person familiarwith the project.
Google tools such as AdMob,AdWords and DoubleClick AdExchange let marketers pro-mote their products or servicesacross a network of mobileapps, as well as online. Googletypically takes about 30% of ad
sales and the rest goes to thepublisher, the company says.
With smartphone salesbroadly stagnating and iPhonegrowth slowing, Apple has be-gun looking to its servicesbusiness—which includes AppStore sales, music-streamingsubscriptions and mobile pay-ments—to drive growth. ItsApp Store ad business was afraction of its total servicesrevenue of $29.98 billion, orabout 13% of Apple’s totalsales, in the fiscal year endedSeptember 2017.
Competing with Google andFacebook wouldn’t be easy, inpart because they build de-tailed user profiles that mar-
tribute ads across their collec-tive apps, the people said.Apple would share revenuewith the apps displaying theads, with the split varyingfrom app to app, they said.
The move would expand onApple’s current small-but-growing business selling pro-motional ads for search termsin its App Store, which deliv-ered nearly $1 billion in reve-nue last year, they said.
Under the concept dis-cussed internally and raisedwith potential partners, userssearching in Pinterest’s app for“drapes” might turn up an addistributed by Apple for an in-terior-design app, or Snap us-ers searching for “NFL” mightsee an ad for a ticket-resellerapp, one of the people said.
It’s unclear where Apple’splanning for the possible adnetwork stands. Representa-tives for Apple, Snap and Pin-terest declined to comment.
The digital ad effort, if itproceeds, would push Appleinto territory dominated byAlphabet Inc.’s Google, whichclaims 35% of the mobile admarket, and Facebook Inc.,which has 25%, according toresearch firm eMarketer.
Tech giants increasingly areelbowing into each other’s turf
ContinuedfromPageOne
against adversaries, some ofwhom have voiced suspicionsthat he or entities he controlshave manipulated the courtprocess and played shellgames with creditors.
In an interview Tuesday, Mr.Avenatti dismissed any allega-tions that he behaved unethi-cally as “hogwash.”
Some who have workedwith Mr. Avenatti describedhim as a skilled lawyer, and hehas won some significant judg-ments.
Some of the litigation Mr.Avenatti faces stems from arisky bet he made in 2012 on astruggling Seattle coffee com-pany, Tully’s Coffee. By 2017,Global Baristas, the companyMr. Avenatti formed to buyTully’s, had accumulated astring of civil judgments fornonpayment of debts and a $5
million federal tax lien. Credi-tors said the company hasmade conflicting representa-tions about its corporatestructure, frustrating their ef-forts to collect debts.
Mr. Avenatti said he sold thecompany but declined to say
when or to whom. The com-pany’s annual report, filed withWashington state authorities inJanuary, lists him as its autho-rized representative, and hiswife said in a divorce filing
that month that he has “owner-ship interests” in the company.
Eagan Avenatti—whichshares an address in NewportBeach, Calif., with Avenatti &Associates APC, the entitythrough which Mr. Avenattirepresents Ms. Clifford—hasalso clashed in court over al-leged debts. In early 2017, Ja-son Frank, a lawyer who hadbeen under contract with thefirm, claimed before an arbi-tration panel that the firmhadn’t paid him an agreed-upon percentage of profits.
Ahead of the arbitrationtrial set for March last year,the panel ordered Mr. Avenattiand the firm’s office managerto appear for depositions byMarch 3 or face sanctions, cit-ing what it described as a“pattern of delay, obfuscationand unresponsiveness.”
U.S. NEWS
On the eve of that sched-uled questioning, Eagan Ave-natti’s lawyer, Phillip A. Baker,emailed Mr. Frank that the de-positions wouldn’t occur be-cause of a petition filed theday before in Orlando, Fla., bya 48-year-old man named Ger-ald Tobin to have the law firmdeclared bankrupt.
Without legal representa-tion, Mr. Tobin had lodged thepetition under a little-usedfederal provision, seeking toput Eagan Avenatti into bank-ruptcy over a claim that thefirm owed him $28,700 for un-specified services.
Mr. Tobin couldn’t bereached for comment. A lawyerrepresenting him in a pendingcriminal domestic-assault casein Orange County, Fla., to whichMr. Tobin pleaded not guilty inMarch, declined to comment.
Mr. Avenatti provided TheWall Street Journal with whathe said was a sworn declara-tion from Mr. Tobin—dated inJuly 2017 but never filed incourt or notarized—saying Mr.Avenatti’s law firm had hiredMr. Tobin to find victims ofthe June 2016 Orlando Pulsenightclub shooting for a casethat was never filed.
An involuntary bankruptcywould normally halt other col-lection efforts against a debtor.A judge at a bankruptcy hear-ing in Orlando, however, re-fused to halt the Eagan Ave-natti arbitration, saying Mr.Tobin’s petition had a “stenchof impropriety. Nothing to dowith the debtor, necessarily.”Mr. Avenatti said the judge’scriticism wasn’t directed at himor his firm.
Two days later, Mr. Avenattihalted the arbitration anywayby placing Eagan Avenatti intoChapter 11 bankruptcy protec-tion. He later struck a settle-ment with Mr. Frank that dis-missed the bankruptcy andrequired Mr. Avenatti to per-sonally guarantee a paymentof $4.8 million to Mr. Frank’snew law firm. In May, Mr.Frank sued Mr. Avenatti for al-legedly failing to pay the first$2 million installment by acourt-approved deadline. Mr.Avenatti contests the debt.
For weeks, California lawyerMichael Avenatti has seized astarring role in the hush-moneyscandal unfolding around Presi-dent Donald Trump.
Inside a courtroom in NewYork on Wednesday, a federaljudge decided she had heardenough from Mr. Avenatti, tell-ing him to take his “publicitytour” elsewhere.
“You are entitled to public-ity so long as—that is, I can’tstop you, unless you are par-ticipating in this matter beforeme,” U.S. District Judge KimbaWood told the square-jawed,47-year-old lawyer.
By the evening, Mr. Avenattihad bowed out of the case in-volving Michael Cohen, Mr.Trump’s personal lawyer, andthe federal probe into paymentsMr. Cohen made to Mr. Ave-natti’s client, Stephanie Clifford,the pornographic actress knownas Stormy Daniels who says shewas paid off to keep quietabout a sexual relationship withMr. Trump. Mr. Cohen and theWhite House have said therewas no such relationship.
The setback for Mr. Ave-natti—who after the hearingappeared on at least four ca-ble-news television shows—represented the latest in astring of blows for the celeb-rity lawyer, who has become ahero for many who are press-ing for Mr. Trump’s downfall.
On a single day last week,his law firm, Eagan AvenattiLLP, and a company he startedwere hit with back-to-backcourt judgments orderingthem to repay millions of dol-lars in outstanding debts. Inthe past year alone, more thana dozen creditors—including aformer colleague, a law firmand former landlords—havegone to court to collect mil-lions of dollars more in debtsthey allege are owed them byMr. Avenatti, his law practiceor his corporate entities. Mostof these cases remain open.
In those and other recentlawsuits, opposing litigantshave raised questions abouttactics used by Mr. Avenatti
BY JACOB GERSHMANAND ALEXANDRA BERZON
Porn Star’s Lawyer Faces Setbacks
Michael Avenatti, lawyer for Stormy Daniels, talking to reporters outside court in New York Wednesday.SETH
WEN
IG/ASSOCIAT
EDPR
ESS
the administration’s views onits authority to wage armedconflict.
The April 13 operation sawU.S., U.K. and French forces tar-get the regime of PresidentBashar al-Assad of Syria in re-sponse to a chemical-weaponsattack that killed dozens. TheWhite House didn’t seek priorauthorization from Congress,nor were the strikes authorizedby the United Nations under in-ternational law.
“The anticipated nature,scope and duration of the oper-ations were sufficiently limitedthat they did not amount to war
in the constitutional sense andtherefore did not require priorcongressional approval,” Mr.Engel wrote.
Members of Congress havebeen seeking more details onthe legal authority underpin-ning the 2018 Syria strikes, aswell as other strikes conductedby the U.S. in 2017. Some areconcerned the administrationcould use similar justification toattack North Korea or Iran.
According to the memo, theJustice Department doesn’t seeany legal need to seek approvalfrom the U.N. or Congress formilitary actions that don’t re-
quire the deployment of signifi-cant numbers of ground troops.
“Military operations willlikely rise to the level of a waronly when characterized by‘prolonged and sustained mili-tary engagement,’ ” Mr. Engelwrote, citing a Justice Depart-ment opinion during the Demo-cratic administration of formerPresident Bill Clinton.
Sen. Tim Kaine (D., Va.) dis-puted the Trump administra-tion’s view that firing missilesagainst another nation wasn’tan act of war.
“That’s nonsense. Is thereany doubt that America would
view a foreign nation firing mis-siles at targets on American soilas an act of war?” Mr. Kainesaid. “The ludicrous claim thatthis president can magically as-sert ‘national interest’ and rede-fine war to exclude missile at-tacks and thereby bypassCongress should alarm us all.”
After pressing Pentagon offi-cials on the matter in April,Rep. Thomas Massie (R., Ky.)said Congress should declarethat President Donald Trump, aRepublican, can’t attack Iran orNorth Korea without congres-sional approval, unless thosenations attack the U.S. first.
WASHINGTON—U.S. strikesagainst Syrian chemical-weap-ons sites this spring were “suf-ficiently limited” that theTrump administration didn’tneed Congress’s approval tolaunch them, according to aJustice Department memo re-leased Friday.
“The president had the con-stitutional authority to carryout the proposed airstrikes onthree Syrian chemical-weaponsfacilities,” wrote Assistant At-torney General Steven Engel inthe first public description of
BY BYRON TAU
Justice Department Defends Syria Strikes
keters can use to more effec-tively target ads. Apple hascriticized that extensive use ofdata for advertising, saying iteffectively turns the customerinto the product.
“The truth is we couldmake a ton of money if wemonetized our customer,”Chief Executive Tim Cook saidin a television interview onMSNBC in March. “We’veelected not to do that.”
For its App Store advertis-ing, Apple says it collects in-formation such as name, ad-dress, age, gender, device use,app activity and music, videoor book downloads. It usesthat data to create groups ofpeople for targeted ads. Itdoesn’t collect personal datafrom tools like Maps and Sirito use for advertising.
Apple is “the most con-strained when it comes to col-lecting and using user data,”said Karsten Weide, a digital-advertising analyst with re-searcher International DataCorp. “If they got back in thead business for good, theywould be super-handicappedcompared with Google andFacebook.”
Apple failed in its last adpush. Its iAd service, launchedin 2010, sold ads within mo-bile apps on iPhones and iPadsbut failed to catch on becauseit charged higher prices thancompetitors and restricted thetypes of ads marketers ran.
Apple shut iAd in 2016.Todd Teresi, who oversees thead business, refocused on theApp Store ad business.
—Eliot Browncontributed to this article.
WASHINGTON—Muslim andJewish groups are objecting tothe appointment of a formerCentral Intelligence Agencyanalyst to a top White Housepost because of his controver-sial views of Islam.
The Anti-DefamationLeague, Council on American-Islamic Relations and othergroups said Fred Fleitzshouldn’t serve as chief ofstaff to national security ad-viser John Bolton because hehas advanced what they callanti-Muslim views.
As a conservative analyst,Mr. Fleitz has called for theU.S. to declare war formally ona broadly defined global jihadmovement; suggested thatmost mosques in the U.S. areincubators for subversion orviolence; and denounced someinterfaith dialogue efforts inthe U.S. as a move by “stealthjihadists” to undermine thecountry’s democratic values.
Mr. Bolton’s decision tobring Mr. Fleitz into the keyWhite House role suggeststhat the new national securityadviser might be moving backtoward a more confrontationalapproach to Islam, an ap-proach favored by PresidentDonald Trump’s first nationalsecurity adviser, Mike Flynn,critics said.
“The appointment of FredFleitz speaks volumes aboutthe administration’s prioritiza-tion of fearmongering and rac-ism over actual national secu-rity issues,” said ScottSimpson, public advocacy di-rector for Muslim Advocates, aWashington-based group.
Mr. Fleitz didn’t respond torequests for comment. But asenior administration officialcharacterized the criticism ofhim as “a deliberate smearcampaign from the left againstthe Trump administration.”
Until this week, Mr. Fleitzserved as senior vice presidentfor policy and programs at theCenter for Security Policy, aconservative think tank thathas been called a hate groupby the Southern Poverty LawCenter, a civil-rights group,because of its views of Islam.
Frank J. Gaffney, founder ofthe Center for Security Policy,denounced critics of Mr.Fleitz.
“Far from being concernedthat terrorist fronts and theirenablers are in hysterics be-cause Donald Trump has en-trusted these key roles to FredFleitz, the American peopleshould be delighted with thisfresh evidence that the presi-dent is determined to keep hispromise to make America safe,as well as great again,” hesaid.
BY DION NISSENBAUM
Pick forBoltonAide DrawsCriticism
Opposing litigantshave raised
questions about Mr.Avenatti’s tactics.
Apple EyesBigger AdBusiness
Contributions to Apple’s ‘Services’ revenue
Apple’s revenue mix
iPhone
Mac
iPad
Services
Other Products
66%61%
11%10%
10%7%
9%
4%7%
15%
2015
2018
Apple Pay
AppleMusic
iCloudAppleCareiTunesLicensing/OtherApp Store
CY18
CY18
CY15
CY152015
2018
27% 26% 26% 12% 8% 1%
1%10%10%12%37% 22% 8%
Stepping Up ServicesApple is accelerating App Store sales and otherbusinesses as iPhone growth slows.
Source: the company;Morgan Stanley Research
THEWALL STREET JOURNAL.
CHILDHOOD POVERTYCREATESADULT POVERTYCREATESCHILDHOOD POVERTYCREATES...
80Years
TODAY’S CHILDHOOD POVERTYMUST NOT BECOME TOMORROW’S.
Learn more at childfund.org
.
�
A6 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * * THEWALL STREET JOURNAL.
Trump and Putin, who held dis-cussions on the sidelines of twointernational meetings in 2017—one at the Group of 20 summitin Germany last July and at aNovember summit in Vietnam.
The potential meeting comesas special counsel Robert Muel-ler continues to investigate al-leged Russian interference inthe 2016 presidential electionand whether associates of Mr.Trump colluded with Moscow.Mr. Trump has denied any collu-
ContinuedfromPageOne
BRUSSELS—The EuropeanUnion fired its first shot onFriday against U.S. steel andaluminum tariffs, launching aWorld Trade Organizationchallenge and vowing swiftduties on American exports, ina sign that the bloc would goblow-for-blow with PresidentDonald Trump over trade.
Brussels says Washington’smeasures are pure protection-ism. With its WTO complaint,it is challenging the U.S. na-tional-security justification forMr. Trump’s levies, in an un-usual rift between the trans-Atlantic allies.
“The U.S. is playing a dan-gerous game here,” EuropeanTrade Commissioner CeciliaMalmström said. For Europe,“Not responding will be thesame as accepting these tar-iffs, which we consider illegalunder WTO rules.”
The White House didn’t re-spond to a request to com-ment.
An EU-U.S. trade war risksundermining joint efforts tocounter China.
Highlighting Europe’s desireto compartmentalize differ-ences with the U.S. and engageWashington in challenging Bei-jing’s state-backed capitalism,the EU also filed a WTO caseagainst China for underminingintellectual-property rightswith forced technology trans-fers.
“If players in the world donot stick to the rule book, thesystem might collapse—andthat is why we are challengingtoday both the U.S. and Chinaat the WTO,” Ms. Malmströmsaid. “We are not choosing anysides, we stand for the multi-lateral system.”
Chinese Foreign Minister
Wang Yi said in Brussels aftermeeting his EU counterpart,Federica Mogherini, that Bei-jing is committed to rules-based, multilateral trade.
He expressed hope for a“mutually beneficial outcome”in the continuing Beijing-Washington negotiations, asMr. Trump oscillates betweenthreatening massive tariffsand striking a bargain to closethe U.S. trade deficit withChina.
“China’s position is not onlytrying to uphold China’s owninterests, but also upholdinginternational rules and theglobal free-trade system,” Mr.Wang said, echoing the Euro-pean position against U.S.moves.
The EU complaints againstthe bloc’s top two tradingpartners also come on the
heels of an agreement amongthe EU, Japan and the U.S. thisweek, when the three outlineda joint road map to overhaulWTO rules on industrial subsi-dies.
Meeting on the sidelines ofan Organization for EconomicCooperation and Developmentgathering in Paris for the thirdtime since launching their tri-lateral effort in December, Ms.Malmström, Japan’s tradechief Hiroshige Seko and U.S.Trade Representative RobertLighthizer targeted commer-cial practices they often attri-bute to China, without identi-fying any country.
Even as Brussels signals itswillingness to cooperate withthe U.S., however, the pathforward in mending bilateralrelations remains unclear. U.S.Commerce Secretary Wilbur
Ross suggested Thursday thatWashington and Brusselscould hammer out a trade dealdespite the tariffs, whose re-moval was an EU preconditionfor discussions.
“We are not going to enterinto any negotiations,” Ms.Malmström said. “That door,for the moment, is closed.”
The European Commis-sion—the EU’s executive arm—has prepared a list of U.S. ex-ports that could be slappedwith €6.4 billion ($7.5 billion)worth of levies.
Meanwhile, an investigationinto vehicle and auto-part im-ports Mr. Trump ordered lastmonth is stoking uncertaintiesand threatening to escalatethe EU-U.S. trade spat.
—Laurence Normanand Jenny Gross
contributed to this article.
A group led by TreasurySecretary Steven Mnuchin hasbeen pushing for a deal cen-tered on boosting U.S. exports,while another led by U.S.Trade Representative RobertLighthizer is looking for moresignificant changes in howChina treats foreign compa-nies—and is more willing toresort to trade sanctions.
China’s chief trade negotia-tor, Mr. Liu, so far has had theblessing of Mr. Xi to use theU.S. pressure to accelerateplans to liberalize financial
to commit to any numericaltargets. In the talks this week,Chinese negotiators again haveresisted agreeing to specific,long-term commitments.
One reason for the Chineseside’s wariness to make con-cessions are Mr. Trump’slooming tariffs and restric-tions on Chinese investments,according to the people. Ontop of that, a divide betweenTrump administration factionsalso casts doubt over how longany trade deal can last, thesepeople said.
poultry, natural gas and crudeoil, among other agriculturaland energy products. The U.S.hopes that such purchaseswould narrow its trade deficitwith China, which stood at$375 billion last year. Presi-dent Donald Trump wants thetrade gap slashed by at least$200 billion by 2020.
In negotiations in May inWashington, a Chinese teamled by Mr. Liu, President Xi Jin-ping’s economic envoy, agreedto try to step up purchases ofU.S. goods, though it declined
The trip was initially seenas a positive move in themonths of wrangling betweenthe U.S. and China over trade.On Tuesday, however, theTrump administration unex-pectedly declared it wouldmove forward with tariffs on$50 billion in Chinese goodsand take other actions aimedat restricting China’s access toU.S. technology.
The U.S. team led by Mr.Ross is aiming to secure a dealin which China would buymore U.S. soybeans, beef,
markets, the auto sector andother industries, according toChinese officials. But he is alsorunning up against growingnationalist calls for Beijing totake a tougher stance againstU.S. demands.
Those differences suggestthat rather than a break-through, Washington and Bei-jing are likely in for a longhaul of recurring talks, econo-mists and analysts in bothcountries said.
—Bob Davis in Washingtoncontributed to this article.
WORLD NEWS
BEIJING—U. S. and Chinesetrade negotiators are hagglingover how to get Beijing to carryout recent promises to pur-chase more American farm andenergy products, with Washing-ton pushing for long-term con-tracts that Chinese officials arereluctant to commit to.
The snag is hanging overhigh-level negotiations sched-uled for this weekend. U.S. ad-ministration officials saidCommerce Secretary WilburRoss remains scheduled to bein China on Saturday. The planis for two days of talks in Bei-jing with China’s top trade ne-gotiator, Liu He, but the WhiteHouse’s recent moves to revivethe threat of tariffs on Chineseimports complicated the pros-pects for his mission.
During the discussions, heldby a U.S. advance team and itsChinese counterpart in Beijingon Thursday and Friday, U.S.officials pressed their Chinesepeers to commit to multiyearpurchase agreements, accord-ing to people with knowledgeof the exchanges from bothsides. For the U.S., such pactscould be useful in proddingChina to lower tariffs and easeregulations and other barriersto imported goods.
Chinese officials have beenreluctant to get locked intolong-term commitments, thesepeople said. Beijing wants“control and leverage,” one ofthem said.
BY LINGLING WEI
Ross Heads to China as Trade Talks StallU.S., seeking to cutdeficit, presses Beijingto commit to long-termpurchase agreements
Cherries are sorted at a factory in Lodi, Calif. U.S. farmers fear a trade war could lead to Chinese tariffs on agricultural exports.
DAVID
PAULMORR
IS/B
LOOMBE
RGNEW
S
BY EMRE PEKER
EU Files WTO Suit Against U.S.
The EU called U.S. metal tariffs pure protectionism and said they were illegal under trade rules.
ULR
ICHBA
UMGART
EN/G
ETTY
IMAGES
Nafta, where you’d go by a dif-ferent name, where you makea separate deal with Canadaand a separate deal with Mex-ico because you’re talkingabout a very different twocountries,” he said.
Earlier on Friday, Mr.Trump blasted Canada’s agri-cultural policy on Twitter.Canada “has treated our Agri-cultural business and Farmersvery poorly for a very long pe-riod of time,” Mr. Trumpwrote on his Twitter account.
Mr. Trump’s tweet taps intolong-running frustrations insome U.S. dairy states overCanadian agricultural policy.
Under Canada’s supply-management policy, the gov-ernment sets prices for dairyproducts based on the averagecosts of production. Produc-tion is controlled through aregulated quota system, andforeign competition isthwarted through steep tariffs.
Mr. Trump added in his lat-est tweet that Canada runs “areally high surplus on tradewith us.”
A Trudeau spokesman citeda report from the Office of theU.S. Trade Representative,which contradicted Mr.Trump’s tweet. The report in-dicated the U.S. recorded agoods-and-services trade sur-plus with Canada of $8.4 bil-lion in 2017.
Mr. Trump appears to befocusing on trade in goodsalone, in which Canada re-corded a surplus of $17.5 bil-lion last year, according to thesame USTR report.
—Louise Radnofskyin Washington
contributed to this article.
OTTAWA—Trade tensionsbetween the U.S. and Canadaescalated on Friday afterPrime Minister Justin Trudeaurebuked the White House’smetals tariffs and PresidentDonald Trump disparagedCanada’s “highly restrictive”agricultural trade policies onTwitter.
The actions are a fresh signof how the American leviesthreaten to roil already con-tentious talks to revamp theNorth American Free TradeAgreement, or Nafta. It alsosignals an abrupt souring ofrelations between two neigh-bors and longstanding allieswho usually keep a cordialtone.
Mr. Trudeau declared “aturning point in the Canada-U.S. relationship,” followingthe tariff announcement onThursday. He called the duties“an affront” to the securitypartnership between the twocountries, recalling how Cana-dian troops served side byside with U.S. soldiers in twoworld wars, Korea and Afghan-istan.
“That Canada could be con-sidered a national securitythreat to the United States isinconceivable,” Mr. Trudeausaid, as he unveiled retaliatorytariffs on U.S. goods, some tar-geting U.S. food products.
Mr. Trump on Friday reiter-ated his hard-line stance ontrade with his North Americanneighbors, raising the pros-pect of separate deals withCanada and Mexico ratherthan the existing treaty.
“I wouldn’t mind seeing
BY PAUL VIEIRA
Trump, TrudeauSpar Over Tariffs
Beijing WoosCountries AngeredBy Tariff Threats
As the U.S.’s plans to im-pose import tariffs promptanger from allies includingCanada and Mexico, China istrying to line up other coun-tries against Washington byenticing them with greateraccess to Chinese markets.
China’s Finance Ministryon Friday released a list ofmore than 1,000 productsthat will be subject to lowerimport tariffs, starting July 1.Chinese consumers have longcomplained about having topay higher prices for Bulgarijewelry, Rolex watches andother imported items.
By cutting the tariffs, Bei-jing is also hoping to spur do-mestic consumption as a wayto offset any weakening oftrade, said Zhang Ming, a se-nior economist at the ChineseAcademy of Social Sciences, astate think tank in Beijing.
—Lingling Wei
sion and has described theprobe as a “witch hunt.” Russiahas denied meddling in the elec-tion.
Asked about a summit takingplace amid Mr. Mueller’s investi-gation, another administrationofficial said, “Of course thereare discussions of the politicalperception.”
In April, Yuri Ushakov, a for-mer Russian ambassador to theU.S. and now an aide to Mr. Pu-tin, said Mr. Trump had invitedMr. Putin to Washington duringa March 20 phone call.
White House press secretarySarah Sanders, responding toquestions about Mr. Ushakov’srevelation, confirmed the invita-tion. “The two had discussed abilateral meeting in the ‘not-too-distant future’ at a numberof potential venues, includingthe White House,” Ms. Sanders
said at the time.Russian Foreign Minister Ser-
gei Lavrov told a Russian newsagency in late April that “Presi-dent Putin is ready for such ameeting.”
Mr. Trump is currently focus-ing on the summit with KimJong Un, the North Koreanleader, according to an adminis-tration official. “If negotiationsthere continue, [work on theRussia summit] will be delayed,”the official said.
The Russia summit “will befocused on specifics, not grandbargaining,” the official said.“Those things need to be negoti-ated.”
Before any summit takesplace, a meeting is likely to oc-cur between Gen. Joe Dunford,the chairman of the Joint Chiefsof Staff, and Gen. Valery Gerasi-mov, the chief of the Russian
General Staff, the official said.These talks would focus on de-escalation of the conflict inSyria.
Mr. Trump has long said hewanted to improve relationswith Russia, while at the sametime bemoaning the poor stateof Russian-U.S. ties.
As president-elect in January2017, he made clear he wanted acordial relationship with Mr. Pu-tin. “If Putin likes DonaldTrump, I consider that an asset,not a liability, because we havea horrible relationship with Rus-sia,” Mr. Trump said at a newsconference.
Three months ago, after hespoke to Mr. Putin on the phoneand congratulated him on hiselection victory, Mr. Trumptweeted that “Getting alongwith Russia (and others) is agood thing, not a bad thing…”
The following month, though,he wrote in a tweet that “our re-lationship with Russia is worsenow than it has ever been, andthat includes the Cold War.”
He added: “There is no rea-
son for this. Russia needs us tohelp with their economy.”
As he has sought better tieswith Moscow, Mr. Trump hasbeen shadowed by the investi-gation into alleged Russian in-terference in the 2016 presiden-tial race.
Mr. Mueller has been ques-tioning former Trump aides andassociates about whether thecampaign colluded with Russiain an effort to defeat Demo-cratic nominee Hillary Clinton.Mr. Mueller is also examiningwhether the president ob-structed justice in firing formerFBI Director James Comey; Mr.Trump has denied any obstruc-tion of justice.
Meeting Mr. Putin last yearon the sidelines of a G-20 sum-mit meeting in Germany, Mr.Trump voiced concerns aboutRussian interference in the elec-tion, then-Secretary of State RexTillerson said at the time. Mr.Putin, during a two-hour meet-ing that lasted twice as long asplanned, denied any involve-ment.
—Michael R. Gordoncontributed to this article.
Trump-Putin TalksPlanned
A summit wouldmark the third
meeting between thetwo presidents.
.
�
A8 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * THEWALL STREET JOURNAL.
WORLD NEWS
SEOUL—North and SouthKorea took steps to revive mu-tual engagement after high-level talks at the demilitarizedzone, seeking to build trust andextending a detente that hasbrought the nuclear-armed re-gime to the negotiating table.
In a joint statement, the Ko-reas agreed to set up talkslater this month to discussholding a reunion for familiesseparated by the 1950-1953 Ko-rean War, reduce tensions onthe highly militarized borderand send a joint delegation tothe 2018 Asian Games. In addi-tion, the officials discussedholding joint celebrations inthe South this month to markthe 18th anniversary of thefirst inter-Korean summit.
Go Myong-hyun, a researchfellow at the Asan Policy Insti-tute, a Seoul think tank, said theinter-Korean talks showed thatPresident Moon Jae-in is tryingto separate cross-border en-gagement from the denuclear-ization talks involving the U.S.
“If he succeeds, he will beable to keep inter-Korean en-gagement issues like family re-unions alive even if the denucle-arization talks between NorthKorea and the U.S. fail,” he said.
Mr. Moon has made outreachto North Korea a tenet of hispresidency since taking officelast year. The liberal leader,whose parents are from theNorth, has said South Korea canuse its economic weight toforge closer links with theNorth, for whom rebuilding asanctions-battered economy isa stated priority.
Despite signs of progress,significant disagreements re-main. Most notably of late, theNorth has demanded a halt toU.S.-South Korean military ex-ercises and has called forSeoul to return a group ofNorth Korean restaurant wait-resses who defected in 2016.
BY ANDREW JEONG
KoreasTo DiscussFamilyReunions
with Mr. Kim or Gen. Kim. AWhite House spokeswomandidn’t respond to repeated ef-forts to seek clarification.Asked earlier Friday if he hadspoken with Mr. Kim, Mr.Trump said, “I don’t want tosay that.”
A White House spokes-woman didn’t return severalmessages seeking comment onFriday.
The president emerged fromhis 70-minute meeting withGen. Kim—which had beenscheduled to last only a fewminutes—in high spirits but of-fering few specifics on the sum-mit, which is expected to drawmedia from around the globe.
Instead, the president de-scribed his coming summit as a“getting-to-know you meeting,”and spoke about the need formultiple encounters with Mr.Kim, outlining a potentiallylong-running diplomatic pro-cess. In April, Mr. Trump saidthe success of any summitwould be defined only by thedenuclearization of North Ko-
U.S. troops in South Korea.Mr. Trump said South Korea
and China would be willing toprovide economic aid to NorthKorea, and that the U.S. wouldbe willing to provide the re-gime with security guarantees.
Still, Mr. Trump stoppedshort of saying he had secureda pledge from North Korea togive up its nuclear arsenal,which has been the Trump ad-ministration’s singular goal.
Mr. Trump described U.S.-North Korea relations as“good.” While he said hewouldn’t lift economic sanc-tions, he wants to stop talkingabout exerting “maximumpressure.” That phrase hasbeen used by the administra-tion to describe its policy ofusing all tools necessary toforce North Korea to stem itsnuclear ambitions.
In an interview with TheWall Street Journal in January,Mr. Trump said that, “I proba-bly have a very good relation-ship with Kim Jong Un of NorthKorea.” The White House dis-
puted the quote, and Mr.Trump since has repeatedly de-clined to say whether the twoleaders have spoken.
Harry Kazianis, director ofdefense studies at the Centerfor the National Interest, athink tank founded by formerPresident Richard Nixon, saidthe Trump administrationshould secure a commitment todenuclearization before thesummit.
“It does not seem, at leastfor the moment, that the ad-ministration has a firm com-mitment on denuclearizationfrom North Korea,” Mr. Ka-zianis said. “North Koreaneeds to know that the priceof being a member of the in-ternational community is itsnuclear arms—nothing more,nothing less. And TeamTrump must stand firm onthat. History would not for-give us otherwise.”
—Vivian Salama,Peter Nicholas
and Louise Radnofskycontributed to this article.
President Donald Trump received a letter from North Korea’s leader that was delivered by Gen. Kim Yong Chol, left, on Friday.
ANDRE
WHARN
IK/A
SSOCIAT
EDPR
ESS
side the Oval Office after Gen.Kim’s departure, Mr. Trump de-scribed the letter as “very nice”and “very interesting.” He ac-knowledged a few minutes af-terward that he hadn’t yet readthe message.
That moment was emblem-atic of an astonishing saga thatstarted with personal tauntsfrom the leaders of the two na-tions, and, on Friday, includedthe first Oval Office visit for aNorth Korean official in 18years. Mr. Trump posed forphotos near the White HouseRose Garden with Gen. Kim.
“I purposely didn’t open theletter,” Mr. Trump said, sayingthat Gen. Kim asked him toread the message later. “I maybe in for a big surprise, folks.”
U.S. officials inspected Mr.Kim’s letter before it was deliv-ered to Mr. Trump, and secu-rity in the West Wing wastightened ahead of the meetingwith Gen. Kim, who also hasbeen accused of playing a keyrole in the 2010 sinking of aSouth Korean warship thatkilled 46 sailors.
A plainclothes Secret Serviceagent took a position right out-side the Oval Office, with moreagents standing watch in thehallway at staggered distances.The White House restricted ac-cess for reporters as uniformedSecret Service, toting weapons,patrolled the driveway of thehistoric presidential building.
Speaking to reporters, Mr.Trump also appeared to ac-knowledge speaking with KimJong Un. Asked if he believedMr. Kim was committed to de-nuclearization, Mr. Trump saidhe told him sanctions would re-main in place until then.
“He wants to be careful,” Mr.Trump said. “But I told him, tobe honest with you, ‘Look, wehave sanctions on.’ They’revery powerful sanctions. Wewould not take sanctions offunless they did that.”
It was unclear if Mr. Trumpwas referring to conversations
ContinuedfromPageOne
SummitWith KimIs Back On
rea. He played down expecta-tions Friday for quick action atthe Singapore talks.
“We’ve gone from a cliff-hanger summit, where war-and-peace was going to be de-cided, to a getting-to-know-youmeeting,” said Victor Cha, whowas an Asia expert in theGeorge W. Bush White House.
“My guess is that the NorthKoreans have made no signifi-cant concessions, while theygot Trump to say no more max-imum pressure. Not a bad out-come for the North Koreans,”Mr. Cha added.
Mr. Trump said he and Gen.Kim spoke about sanctions aswell as a potential drawdown of
President Trumptempered
expectations for theinitial meeting.
Gain an insider perspective on your newweekend read at our
member-exclusive brunch. Sip champagne aswe celebrate the
newWSJWeekend and unwind at SoHo’s landmark Sadelle’s
with our featured columnists, including fashionwriter Nancy
MacDonell, The Numbers columnist Jo CravenMcGinty,
technology columnist ChristopherMims,Moving Targets
columnist Joe Queenan, Tax Report writer Laura Saunders,
and OnWine columnist Lettie Teague.
WHEN: JULY 14WHERE:NEWYORK
EXCLUSIVE TOWSJ MEMBERS
BOOK NOWATWSJPLUS.COM/WSJ-WEEKEND
WSJ TALK / EXPERIENCE / OFFER / GETAWAY
Attend anExclusiveWSJ+WeekendBrunch
© 2018 Dow Jones & Co., Inc. All rights reserved. 6DJ6277
.
�
THEWALL STREET JOURNAL. * * * * * * Saturday/Sunday, June 2 - 3, 2018 | A9
MADRID—Spanish lawmak-ers voted to oust Prime Minis-ter Mariano Rajoy, ushering in acenter-left government whosenew leader pledged to enact amoderate, pro-European agendaunlikely to knock Spain’s robusteconomic recovery off course.
Spain’s parliament voted 180to 169, with one abstention, onFriday to remove Mr. Rajoy,cutting short the second termof one of Europe’s longest-serving leaders currently inpower. He is being succeededby Pedro Sánchez, the leader ofthe center-left Socialist Party,which last week had called forthe no-confidence vote.
Mr. Sánchez seized on a cor-ruption ruling last week thatfound Mr. Rajoy’s center-rightPopular Party financially bene-fited from a graft scheme. Thecorruption scandal was the finalblow for a premier who man-aged to win re-election in 2016but emerged from the vote witha weak minority government.
Mr. Sánchez told lawmakersthat his goals include bolsteringsocial policies to address prob-lems such as unemploymentand poverty levels, both ofwhich remain high despiteSpain’s strong growth.
However, the new premier
phase,” said Sergio Romano, aveteran Italian diplomat.
Long-term unemploymentalso remains a scourgethroughout the south. Nearly60% of unemployed Italianshave been jobless for at least ayear, and about five millionItalians live in absolute pov-erty—nearly double the num-ber a decade ago, according toIstat, the national statisticsagency.
Growth in Italy and Greecehas badly lagged behind that inthe rest of Europe. Italy’seconomy is still nearly 6%smaller than it was before thecrisis, making it the only coun-
try in the Group of Seven notto have grown since then. TheItalian economy grew 1.5% lastyear, its fastest pace in sixyears, but that growth is al-ready slowing this year, andwages haven’t risen.
The 5 Star Movement andthe League have given voice tomany in Italy who still struggleto find jobs. A new coalitiongovernment supported by thetwo parties, which won abouthalf of all votes cast in March’sparliamentary elections, wassworn in Friday.
Greece’s economy, whichhas suffered a longer down-turn than the U.S. did during
the Great Depression, isaround 28% smaller than be-fore the crisis. The govern-ment of Prime Minister AlexisTsipras must overhaul dozensof labor and pension rules inthe coming weeks to qualify toexit a bailout regime that hasdemanded tax increases, pen-sion cuts and the sale of state-owned assets.
Declan Costello, the Euro-pean Commission’s missionchief to Greece, said Thursdayit will take up to 10 years forthe country to complete thenecessary reforms.
—Nektaria Stamoulicontributed to this article.
WORLD NEWS
ROME—This week’s high-profile political crises in Spainand Italy are making plain thesocial and economic scarsSouthern Europe still bears al-most a decade after the euro-zone crisis, destabilizing tradi-tional alliances and feedingpolitical discontent.
In Italy—now home toWestern Europe’s largest anti-establishment movement—twolarge outsider parties are com-ing to power, bolstered by thevotes of millions of Italiansstuck in a cycle of stubbornlyhigh unemployment and pov-erty.
In Spain, Prime MinisterMariano Rajoy was ousted Fri-day following a corruptionscandal that proved the finalblow for a leader whose sup-port has gradually erodedsince he imposed unpopularmeasures to avert economic di-saster during the eurozone’sdebt crisis.
Meanwhile, Greece is enact-ing yet another round of pain-ful reforms—including a 13thround of pension cuts—in thehopes of freeing itself from aneight-year bailout regime. Buteven after the country exitsthat regime, its creditors willkeep tight control on its bud-get, stoking already deep pop-ular anger that has spilledover into violence by extrem-ist groups.
“We are still dealing withthe aftershock of the crisis,”said Franco Pavoncello, a pro-fessor at John Cabot Univer-sity in Rome. “These are coun-tries that sufferedtremendously when the crisishit.”
Europe’s overall economicpicture is its brightest in years,but millions of people inSouthern Europe—the epicen-ter of the eurozone debt crisishave yet to feel the recovery.
Many blame the aftereffects
of reforms enacted at theheight of the crisis, whichprompted bailouts in Spain,Portugal, Greece, Ireland andCyprus.
Mr. Rajoy, for instance, loos-ened labor laws in a bid to en-courage companies to hire.That helped Spain bring its un-employment rate down from apeak of 27% in early 2013 to17% today and encouraged eco-nomic growth of at least 3%each year since 2015, making itthe poster child of crisis-erareforms.
But around 90% of newwork contracts in Spain areshort-term, often in poorly
paid jobs and sometimes last-ing only a few days. The phe-nomenon has especially hurtthe young across Southern Eu-rope: In Italy last year, morethan 60% of contracts forthose under 25 were short-term.
The result has been the fail-ure to launch millions of youngpeople. In a poll by Pew lastyear, at least two-thirds of re-spondents in Spain, Italy andGreece said they expected theirchildren to be worse off finan-cially than their parents, com-pared with 52% in Germany.
“Southern Europe is clearlygoing through a difficult
BY DEBORAH BALL
Europe’s South Feels Crisis AftereffectsSpain, Italy andGreece face political,social and economicfallout from EU woes Gross domestic product per person in Southern Europe
is lower than in the eurozone as a whole...Per capita GDP, fourth quarter 2017
Cutbacks in governmentspending and a rebound ingrowth have improveddeficit ratios…General-government balance asa percentage of GDP
…and lower borrowing costs,pushed down by ECB policymoves, have shrunkinterest-payment burdens…Interest payments as apercentage of GDP
…but government debt levelsremain above the eurozone’s60% of GDP limit.Government debt as apercentage of GDP
…and the southern economies have been slow torecover from the downturn.Change since 1999 in inflation-adjusted per capita GDP
Unemployment has fallen inSpain and Greece but isstill high…Unemployed as a percentage ofthe active employed andunemployed population
…while a large percentage ofunemployed have been joblessfor two years or more…Share of the unemployed whohave been unemployed for24 months or more
…and a still-elevated share ofyouth are jobless and not inschool or in training.Share of those age 15–24 neitherin employment nor in educationand training
The economies of Southern European countries are still behind eurozone averagesby many measures, partly due to longer-term consequences of the eurozone debtcrisis, for which the region was the epicenter.
Note: Employment data is seasonally adjustedSource: Eurostat THEWALL STREET JOURNAL.
tDeficit
sSurplus
Germany
Euro area
Italy
Spain
Greece
€10,000
8,500
7,400
6,500
4,200
40
–10
0
10
20
30
%
2000 ’10 ’15’05
Euro area
Italy
Spain
Greece
Germany
4
–16
–12
–8
–4
0
%
2000 ’10 ’15’051995
20
0
4
8
12
16
%
2000 ’10 ’15’051995
200
0
40
80
120
160
%
2000 ’10’05 ’15
25
0
5
10
15
20
%
2010 ’15
100
0
20
40
60
80
%
2000 ’10 ’15’05
25
0
5
10
15
20
%
2000 ’10’05 ’15
Euro areaItalySpain Greece Germany
Southern European economies
Mariano Rajoy, right, on Friday congratulated Pedro Sánchez, who succeeded him as prime minister.
PIER
RE-PHILIPPE
MARC
OU/PRE
SSPO
OL
will lead a minority governmentthat is likely to struggle to passlegislation and has alreadypromised to call parliamentaryelections ahead of the current2020 deadline.
Mr. Rajoy had seen his sup-port steadily erode since he be-came prime minister in 2011and began to enact a series ofpainful economic reforms tohelp Spain recover from itsdeepest crisis in decades. He
has shouldered much of the po-litical blame for a recovery thathas left millions of Spaniardsbehind. He is the first Spanishprime minister to be unseatedin a no-confidence vote.
“It has been an honor toleave Spain better than I foundit,” Mr. Rajoy told lawmakersbefore the vote.
Mr. Sánchez said he wouldhonor Spain’s commitments tothe European Union, including areduction in the country’s pub-lic debt, and pledged to keep in
place Mr. Rajoy’s 2018 budget,which boosts pension payments.
A leftist government inSpain will be an anomaly inEurope, where most center-left parties have fallen frompower or seen their supportwane in the past several years.
Mr. Sánchez’s government,like his predecessor’s, couldstruggle to pass his legislativeagenda. The Socialist Partyhas just 84 seats in Spain’s350-member parliament,meaning Mr. Sánchez will leada minority government witheven thinner support than Mr.Rajoy’s. The new premier mustrely on a hodgepodge of par-ties to pass bills, including thefar-left, antiestablishment Po-demos and two Catalan pro-in-dependence groups.
Mr. Rajoy accused Mr. Sán-chez of presenting the no-con-fidence vote as a play forpower without having to facean election, blasting the newgovernment as a “Franken-stein” coalition.
Mr. Sánchez hasn’t pro-vided an exact time frame fornew elections, though someexpect a vote as soon as thisautumn. The Socialists arelikely to try to pass bills popu-lar with their center-left base,including one to address a paygap between men and women.
BY JEANNETTE NEUMANN
Spain’s Prime Minister OustedFollowing Corruption Scandal
Rajoy is the country'sfirst prime ministerto be unseated in ano-confidence vote.
.
�
A10 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * * * THEWALL STREET JOURNAL.
SINGAPORE—Indian PrimeMinister Narendra Modi setout his vision for a “new Indo-Pacific”—widely seen as aframework for closer ties be-tween the U.S., India and re-gional powers wary of China’srise—but sought to dispel theview that it was aimed at con-taining Beijing.
“India does not see theIndo-Pacific region as a strat-egy or as a club of limitedmembers,” Mr. Modi said Fri-
Government officials solicit ideas in Haikou's Meilan District. With the program, ‘ordinary people support us more and more,’ says a worker.
TE-PINGCH
EN/THEWALL
STRE
ETJOURN
AL
These discussions come at atime of heightened tensionsbetween the U.S. and China.Washington last month re-scinded an invitation to Chinato participate in an interna-tional naval exercise.
A top Chinese military offi-cer speaking at the conferencequestioned the substance ofthe Indo-Pacific concept. “Froma security perspective none ofthese countries consider Chinaan overt enemy,” said SeniorCol. Zhou Bo. “So this shouldnot be a military alliance.”
The U.S. has been pushingIndia to intensify defense co-operation, including buyingmore U.S. military equipmentand forging a closer four-waynaval partnership involvingJapan and Australia. The U.S.military recently changed thename of its headquarters cov-ering Asia and the PacificOcean from Pacific Commandto Indo-Pacific Command. U.S.Defense Secretary Jim Mattisspoke at the conference Satur-day, where he sought to reas-sure Asia-Pacific allies.
day at the Shangri-La Dia-logue, an annual gathering ofdefense officials and expertsin Singapore.
The U.S. has in recentmonths promoted the idea ofthe Indo-Pacific in lieu of“Asia-Pacific” as it attempts tobolster India’s regionalrole. Analysts say the ideaconveys common concernsover Beijing’s increasingly as-sertive stance across a broadswath of territory, from theIndian Ocean to the SouthChina and East China seas.
icy recommendations.Wu Haining, one of the ad-
visers to Haikou’s program,said the initiative represents aviable kind of political reformfor China—one that allows cit-izens a voice, while not threat-ening the government.
“What they’re voting on ischicken-feather, garlic-skinstuff,” he said, using a com-mon idiom meaning trivialmatters. “It will not destabi-lize things.”
—Kersten Zhangcontributed to this article.
up the city’s appearance, in-stead of tackling clogged gut-ters. “If you can’t fix these ba-sic problems, then nothing’s ofany use,” he said.
In recent years, Beijing hasembraced a posture of greateraccountability, urging more ef-forts to take the public’s pulse.
In Hangzhou, the govern-ment has polled citizens aspart of department perfor-mance evaluations for years,while Nanjing recently beganoffering cash prizes to resi-dents who come up with pol-
On a recent day, Chen Zejin,76 years old, was buying let-tuce at a market when he sawgovernment officials askingresidents for ideas on how tospend public funds. He filledout a form, suggesting the cre-ation of more youth after-school programs. “Before, thegovernment would decide!” hesaid. “This is a big change.”
Others voiced skepticism.Chen Guowen, a 48-year-oldresident, groused that Hai-kou’s government was morefocused on efforts to spruce
Li Fan, a think-tank founderwho is consulting on Haikou’sproject, said such programshelp satisfy the desire of Chi-nese citizens to have a voice inpublic affairs. “You absolutelycan’t stop it,” he said. “Andsince you can’t stop it, youneed to give it an outlet.”
Officials are promoting theeffort with posters reading“Our District, Our Choice,”stepped-up canvassing on thestreets and offering clothshopping bags to residentswho submit ideas.
mon complaints in many partsof the country.
President Xi Jinping hassaid these concerns need to beaddressed, and pushed for of-ficialdom to become more ser-vice-oriented.
At the same time, Mr. Xihas also moved to strengthenthe party, and his own power,by locking up dissidents andexpanding the government’sweb of surveillance.
In Haikou, in China’s south-ern Hainan province, officialssay allowing residents to voteon how to spend governmentmoney, even just a fraction ofthe budget, can help boost at-titudes toward officialdom.
Zhang Xuefen, who hasworked as a grass-roots-levelgovernment employee in Hai-kou for more than a decade,said she has seen a shift inresidents’ attitudes since theprogram’s launch.
“Ordinary people supportus more and more,” Ms. Zhangsaid, sitting in her office sur-rounded by forms from resi-dents with ideas for how tospend the government’smoney. “They are more coop-erative now,” she said, “andour authority is stronger.”
WORLD NEWS
HAIKOU, China—Some resi-dents of this leafy seaside cityare getting a chance to dosomething unusual in China:vote on how their local gov-ernment spends its money.
Haikou is one of several cit-ies trying new ways to givecitizens a voice while bolster-ing the reputation—and withit the authority—of their localgovernments.
Residents in Haikou’s Mei-lan District are invited to offersuggestions on how to im-prove their quality of life, suchas through parks and seniorservices, and this week theyvote among the citizen-pro-posed ideas on how to spend12 million yuan ($1.9 million)of government money—around1% of the budget.
Public discontent in Chinais principally a local affair.Corruption, indifference andexcess bureaucracy are com-
BY TE-PING CHEN
A China DistrictHolds a Vote...On Its BudgetOfficials, seeking thesupport of residents,call for ideas and letthe people decide
BY NIHARIKA MANDHANA
For India’sModi, aDelicateRegional Balance
India’s leader said the ‘Indo-Pacific’ idea isn’t aimed at any country.
EDGARSU
/REU
TERS
ADVERTISEMENT
For over 25 years, The Great Courses has brought the world’s foremost
educators to millions who want to go deeper into the subjects that
matter most. No exams. No homework. Just a world of knowledge
available anytime, anywhere. Download or stream to your laptop or
PC, or use our free apps for iPad, iPhone, Android, Kindle Fire, or
Roku. Over 600 courses available at www.TheGreatCourses.com.
Optimize Your Brain’s FitnessYour brain is the most powerful machine in the world—and it’s constantly changingthrough a process known as brain plasticity. Once you take advantage of thisprocess, you can improve your brain’s jaw-dropping powers at any age. In fact,optimal brain fitness leads to improvement in a range of areas, including memory,attention, creativity, and motor skills.
Discover the secrets to expanding your brain’s power to meet everyday challengesand enhance the quality of your life with Optimizing Brain Fitness. This engaging12-lecture course shows you how to take advantage of the basic principles ofbrain operation and build the brain you want to live with for the rest of yourlife. Delivered by Dr. Richard Restak, an award-winning teacher and practicingneurologist, these lectures are packed with vital information and research-basedexercises you can perform every day to tap into your hidden mental potential.
Offer expires 06/16/18
T��G����C���.���/3 1-800-832-2412
Optimizing Brain FitnessCourse no. 1651 | 12 lectures (30 minutes/lecture)
Optimizing Brain FitnessTaught by Professor Richard Restak��� ������ �������� �������� �����
�� �������� ��� ������ ������
LIM
ITED
TIME OFFER
70%offO
R
DER BY JUNE
16
SAVE UP TO $160
DVD $199.95 NOW $39.95Video Download $169.95 NOW $24.95+$5 Shipping & Processing (DVD only) and Lifetime Satisfaction Guarantee
Priority Code: 159657
������ �����
1. How Your Brain Works
2. How Your Brain Changes
3. Care and Feeding of the Brain
4. Creativity and the Playful Brain
5. Focusing Your Attention
6. Enhancing Your Memory
7. Exercising Your Working Memory
8. Putting Your Senses to Work
9. Enlisting Your Emotional Memory
10. Practicing for Peak Performance
11. Taking Advantage of Technology
12. Building Your Cognitive Reserve
.
�
THEWALL STREET JOURNAL. * * * * * * * Saturday/Sunday, June 2 - 3, 2018 | A11
His morning routine included adose of ginseng, a tonic he discov-ered during a trip to South Korea.
He was born in Paris on April4, 1925, as Serge Bloch, thenthe Jewish family’s name.
His father, an engineer, developeda propeller, made of wood in a fur-niture plant, that was used onWorld War I airplanes. When theNazis invaded during World War II,the family took refuge in Cannes.In 1944, the German Gestapo, aidedby the police of Vichy France, ar-rested the family. Serge and othermembers of his family were sent toprison camps in France, while hisfather was deported to the Buchen-wald death camp, where he sur-vived and was freed in 1945.
After the war, Marcel Blochchanged the family name to Das-sault, in honor of the alias used byhis brother, Darius Paul Bloch,when he fought in the French Re-sistance.
Serge Dassault graduated froman elite engineeringschool, École Polytechnique, and anaerospace institute before joiningthe company in the early 1950s. He
was sent to the U.S. and elsewhereto find buyers for business jets inthe 1960s and then put in charge ofthe electronics division.
After Marcel Dassault died in1986, Serge Dassault outmaneu-vered French military leaders whosaid he wasn’t up to the job of run-ning the business. His early yearsas head of the group were rocky.Hurt by a decline in sales of fighterjets to Arab countries, Dassaultclosed five of its 17 factories andreduced employment at the parentcompany by 20%.
In his political life, he fulmi-nated against France’s wealth tax,35-hour workweek and restrictionson layoffs. Gay marriage, he said,was an “enormous danger to thecountry.” In the 1980s, he began acampaign to “liberate” the de-pressed Parisian suburb of Corbeil-Essonnes from left-wing politicalcontrol. He finally was electedmayor of the town in 1995. He alsoserved in the French Senate.
In 1998, Belgium’s highest courtconvicted Mr. Dassault and othersof corruption in a case involvingbribery to secure orders for elec-tronic equipment used in Belgium’sfighter jets. Mr. Dassault’s two-yearprison sentence was suspended.
In 2009, French authorities an-nulled his re-election as mayor ofCorbeil-Essonnes after allegingthat he paid cash for votes frompoor immigrant families. Mr. Das-sault said he had given money tohelp people and organizations inthe town but denied buying votes.
Like his father, Mr. Dassaultchose not to hand over the reins ofhis company to any of his children.Instead, he named a longstandingcolleague, Charles Edelstenne, ashis successor. Mr. Dassault’s survi-vors include his four children andhis wife, Nicole.
� Read a collection of in-depthprofiles at WSJ.com/Obituaries
SERGE DASSAULT
1 92 5 — 20 1 8
UnderratedSonKeptFrenchJetMakerFlyingHigh
Serge Dassault had to fight fora role in Groupe Dassault, aFrench maker of military and
corporate jets founded by his fa-ther, Marcel Dassault. The fatherwasn’t impressed with the son’sacademic record in engineeringand at first gave him only periph-eral roles in management.
“When I joined the company, Icould tell it annoyed him,” theyounger Mr. Dassault once told aFrench magazine.
“There wasn’t room for two,”his mother, Madeleine Dassault,said.
Serge Dassault finally becameCEO of the group in 1986, at age61, when his father died. The youn-ger Mr. Dassault maintained familycontrol of a company of strategicimportance to France, producingMirage and Rafale jet fighters, aswell as Falcon business jets. Thecompany also expanded its globalpresence in computer-aided designand other software, and diversifiedin such areas as wine productionand art auctions. Mr. Dassaultbought Le Figaro, the country’sleading conservative newspaper.
His reputation suffered in hislater years when he was prose-cuted for tax fraud, vote buying inlocal French elections and briberyrelated to aircraft sales in Belgium.
Mr. Dassault died May 28, ap-parently of a heart attack, at hisoffice on the Champs-Élysées inParis. He was 93.
Forbes estimated Mr. Dassault’snet worth at $26.1 billion, rankinghim as the world’s 30th richestperson. He enjoyed hunting deer,sometimes chasing them down inan off-road vehicle, mounted witha gun turret, on his property.
He had little time for societydinners, music or movies. Heworked long hours and insistedthat six hours of sleep was enough.
BY JAMES R. HAGERTY
PAUL CARL IN
1 9 3 1 — 20 1 8
Executive Tried toMakePostal Service Zippier
When he became head ofthe U.S. Postal Service inJanuary 1985, Paul Carlin
was determined to make the bu-reaucracy more businesslike. Thenew postmaster general distrib-uted copies of the best-sellingmanagement book “In Search ofExcellence” to thousands of postalmanagers. To reduce losses, hecut costs, including his salary.
“We’re just one entry in ahighly competitive market,” hesaid. “We must earn the right tocarry the mail.”
Soon, however, some membersof the Postal Service’s Board ofGovernors accused Mr. Carlin ofbeing indecisive. He was fired af-ter just 12 months. Six monthslater, Mr. Carlin shot back with a
lawsuit, saying he had been dis-missed for opposing corruptequipment-buying practices. Hislegal battle for reinstatementwent to the Supreme Court, whichdealt him a defeat when it de-clined to intervene.
By the 1990s, Mr. Carlin hadmoved on. He and a partner setup Mail2000 Inc. to help otherfirms with billing. The companyzapped bills electronically to re-gional printing centers near theirfinal destinations, then put themin the mail. The partners soldMail2000 to United Parcel ServiceInc. for about $80 million in 2001.
Mr. Carlin died April 25 ofpneumonia and bronchitis in Ar-lington, Va. He was 86.
—James R. Hagerty
TED DABNEY
1 937 — 20 1 8
Pong Made Co-FounderOf Atari Famous
Ted Dabney helped designand build machines to playPong, a simple videogame
that seemed shockingly modernwhen it began appearing in barsin the early 1970s.
The San Francisco native, wholearned electronics in the Ma-rines, was a co-founder of AtariInc., which developed the game.His role included buying televi-sion sets and reconfiguring themas screens on which two playerscould battle by batting an elec-tronic ball back and forth Ping-Pong style. He attached coin slotsof the type used in laundries.
Mr. Dabney was more of a self-taught engineer than an entrepre-neur. “If somebody wants some-thing done, I figure out what it
takes to do it,” he said in an oralhistory for the Computer HistoryMuseum in 2012, “and that’s basi-cally all I do.” After a falling-outwith the other Atari founder, No-lan Bushnell, Mr. Dabney left inthe early days of Atari’s growthsurge. Mr. Bushnell sold Atari toWarner Communications Inc. in1976 for about $28 million.
In the mid-1990s, Mr. Dabneyand his wife, Carolyn, bought agrocery store in Crescent Mills,Calif., and ran it for a decade. Hedied of esophageal cancer May 26in Clearlake, Calif. He was 81.
Though he missed out on achance to make a fortune atAtari, “Ted was not bitter aboutanything,” his wife said.
—James R. Hagerty
the ancient Egyptians of themodern age--plagued not byboils, frogs, flies, and lice butby fire, flood, mold, andtheft.”
Faced with an apartment-building owner seeking depre-ciation deductions, he wrote:“We are tempted to say this iswhy AmeriSouth throws in ev-erything but the kitchen sinkto support its argument—ex-cept it actually throws in afew hundred kitchen sinks,urging us to classify them as‘special plumbing,’ depreciableover a much shorter periodthan apartment buildings.”
When a chiropractor triedto claim dubious deductions,Judge Holmes responded:
“The Commissioner thoughtthis was a stretch and urges usto support his adjustment,” hewrote. “We particularly disbe-lieve his claim that the Xbox,Wii, big-screen TVs, and otherelectronics in his basementwere used exclusively for chi-ropractic purposes since thisclaim conflicts with his muchmore plausible admission tothe IRS examiner during auditthat his daughter and his girl-friend’s son would play thesevideo games while he was onthe phone.”
Judge Holmes, nominatedby George W. Bush in 2003, isup for a second 15-year termon the court. He declined aninterview, saying only that hewas grateful for PresidentDonald Trump’s nominationand looking forward to work-ing with the Senate as it con-siders his confirmation.
The late pop star in1987 and theHonorable Mark V.Holmes.
judge with a greater depth ofnon-tax experience than most.
Judge Holmes, a 57-year-oldnative of Buffalo, N.Y., learnedlegal writing as a clerk for 9thCircuit Judge Alex Kozinski,then worked as a private liti-gator and a staff member atthe International Trade Com-mission before turning to taxlaw in the late 1990s.
“Mark’s approach is proba-bly less formulaic than many,”says Eileen O’Connor, his bossat the Department of Justice
Tax Division in the early2000s. “Many tax lawyers, Ithink, are too limited in theiroverall experience, and havedifficulty explaining tax con-cepts to other people becausethey don’t have a non-tax con-cept to use to explain.”
Judge Holmes has plenty ofnon-tax concepts—and jokes.
Give him a case about ascuba-diving business, andhe’ll note how the owner dovein. Give him a riverboat-casinocase, and he’ll describe the IRStrying to sink the taxpayer’sshelter.
In the case of a used-carbusinessman who had troublesupporting his claims with pa-per, he wrote: “Tax records are
$400MThe disputed value of MichaelJackson’s estate.
OBITUARIES
dling fortune of a man in hisdotage:
“Arthur Marsh worked hardand lived simply for decades,but when he became old andinfirm he met Angelina Alhadi.In the two last years of hislife, she somehow came to re-ceive more than a million dol-lars from him.”
Because Americans canchallenge the Internal RevenueService in Tax Court withoutpaying taxes first, the docketis filled with ordinary, down-on-their-luck Americans press-ing small claims against thebureaucracy. It’s also packedwith aggressive deals pitchedby shady advisers to success-ful business owners and messymultiyear disputes betweenlarge corporations and thegovernment.
That diversity of subjectsgives Judge Holmes his rawmaterial and it occasionallyyields extraordinary casessuch as Mr. Jackson’s.
The IRS and Mr. Jackson’sestate have settled some dif-ferences, but they’re stillabout $400 million apart onthe value of what he left be-hind, according to a recent fil-ing. They are disputing theworth of song rights Mr. Jack-son owned—his own writingsand his interest in pieces like“Runaround Sue.” They’re alsofighting over the extent of hisposthumous right to publicity,or his estate’s ability to profitfrom his image.
The IRS argues that Mr.Jackson was, in fact, wealthy,despite his myriad financialproblems. Mr. Jackson’s law-yers say the post-death reha-bilitation of his image was nosure thing. Their point is thatthe estate’s marketing suc-cesses, including a movie anda Cirque du Soleil show,weren’t obvious and inevitablewhen Mr. Jackson died in June2009, and that his net worthat the moment of death iswhat counts.
They’re arguing before a
ContinuedfromPageOne
FROM PAGE ONE
LIAISON/GETTY
IMAGES
MichaelJackson’sTax Case
UNITED
STAT
ESTAXCO
URT
630 Royal Street, New Orleans, Louisiana • 877-677-2801 • [email protected] • rauantiques.com
Since 1912, M.S. Rau Antiques has specialized in the world’s finest art, antiques and jewelry.Backed by our unprecedented 125% Guarantee, we stand behind each and every piece.
Time FliesAutomaton Clock
Mechanical brilliance. Marvelous craftsmanship.Classic tale. This 18th-century Dutch clock is setapart by its rare automaton mechanism, whichbrings to life the mythological tale of Perseus
rescuing the princess Andromeda from the fury ofPoseidon. The winged Pegasus flies over the scene,
while continuously sailing ships rock with thetumultuous waves. A sophisticated set of weightdriven wheel trains smoothly operate this 8-daymovement clock, which represents a stunningmarriage of aesthetic and mechanical brilliance.Circa 1750. 115”h x 121/2”d x 231/2”w. #30-7588
View a video about this rare clock at rauantiques.com
.
�
A12 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * * THEWALL STREET JOURNAL.
planned investment in thearea’s ports to date.
Berbera, a coastal city ofabout 200,000, is a focus of themilitary and commercialbuildup. The Soviets erected amajor military base here duringthe 1960s and 1970s, whichflipped to the U.S. in the 1980safter the Soviets stopped sup-porting dictator Siad Barre, andhe switched sides. The U.S. ar-ranged for access to Berbera’sairport runway, one of Africa’slongest, as a potential emer-gency landing strip for thespace shuttle.
When DP World, the world’sthird-largest port operator,struck a $442 million deal tomodernize and manage Ber-bera’s port in mid-2016, a more-lucrative military agreementbetween Somaliland and theU.A.E. quickly followed. Thedeal will see the U.A.E. refur-bish the old military base aswell as a small port nearby formilitary use for 25 years.
DP World said it boostedtraffic at the commercial portby more than 20% in the pastyear. It recently brought inmodern cargo equipment tospeed up the loading and un-loading of vessels, and thismonth the company plans tostart extending the quay.
“We have no doubt thisplace and the broader area willlook very different in a fewyears’ time,” said SupachaiWattanaveerachai, the port’schief executive.
DP World said Berbera’s ex-pansion is part of a strategy tosecure more points of accessalong the Horn and further in-land, helping to increase tradewith fast-growing economieslike Ethiopia and tapping EastAfrica’s swelling consumerclass.
Mr. Shire, the Somalilandforeign minister, said as part ofthe deal U.A.E. will build newroads to connect the commer-cial port to the Ethiopian bor-der and fund education andhealth-care programs.
Somalilanders, long isolatedafter declaring independencefrom Somalia in 1991, said theyhoped the first major economicrecognition will connect themto regional trade and help bol-ster a fledgling army. Somali-land is treated as de facto inde-pendent of Somalia by manycountries, although it hasn’tbeen formally recognized assuch.
“I am hopeful improvementsto the port will bring more peo-ple here…business is alreadygetting bigger daily,” said 24-year-old Hamda Abdirahman,who cooks at her mother’s res-
taurant in the town center.DP World is by far the big-
gest private-sector employer inSomaliland, with some 2,200workers. The company until re-cently hauled in the devaluedlocal currency in trucks to paysalaries.
Property prices have risen asmuch as 100% along the water-front, and compounds are beingconstructed near the ocean.Older hotels are getting up-graded.
On a recent day, Berberawissitting cross-legged and chew-ing the narcotic khat leaf saidthe investments provide ashield for their breakawaystate. “As Somalilanders ourpassports aren’t recognizedanywhere, we can’t travel,” said28-year-old Mohamed Jama, aveterinarian who was in a shopnearby. “After this deal, theU.A.E. may accept our pass-ports, and I could get a chanceto work in Dubai.” U.A.E. offi-cials didn’t respond to requestsfor comment.
Others fear the investmentscome with too high a price: be-ing dragged further into con-flicts across the Middle Eastand the Horn. Frictions be-tween Somaliland and Soma-lia—a country war-torn for de-cades—have already beenworsened by the Gulf’s diplo-matic crisis over Qatar.
In a Western-backed model,Somalia has been divided intofederal states. Outside Mogadi-shu, half of the states have bro-
ken with President MohamedAbdullahi Mohamed, who crit-ics say is aligned with Qatar de-spite formally being neutral inthe Gulf spat. The states havedeclared support for the U.A.E.and Saudi Arabia, which arepouring in dozens of millions ininvestment to help sway opin-ion.
The Mogadishu governmenthas called the U.A.E.’s Berberainvestment illegal and has com-plained to the U.N. “If you be-come part of a bloc against an-other bloc, you gain friends,you make enemies,” said Soma-liland’s Mr. Shire. “It’s as simpleas that.”
Somali-U.A.E. relations brokedown spectacularly in April,when Somali agents boarded aU.A.E. airplane in Mogadishuand confiscated $9.6 million incash. In a Hollywood-style op-eration, the Somali agents heldU.A.E. security personnel atgunpoint, seized the aircraftand removed the money inlarge bags.
U.A.E. said the funds wereflown in to pay salaries andcosts at its military base inMogadishu, where its forcessince 2014 have trained Somalisoldiers to fight against al-Sha-baab, the local al Qaeda-affili-ated Islamist insurgency. Afterthe incident, U.A.E. suspendedaid and the training program inSomalia and left the base. Later,Somali soldiers trained byU.A.E. skirmished with officersloyal to Somalia’s president.
Officials from U.A.E. and So-malia didn’t respond to re-quests for comment.
In January, 103 unmarkedcontainers arrived at Mogadi-shu’s port from Jeddah, SaudiArabia. Puzzled officials exam-ined the manifest, to discoverthe containers held millions ofrounds of Chinese-made ammu-nition, for AK-47 assault rifles,DShK machine guns and shoul-der-mounted rocket-propelledgrenades, people familiar withthe matter said. In the past fewweeks, another 57 containerswith similar contents arrivedfrom Saudi Arabia.
The shipments were in-tended for some part of the So-mali forces under a deal be-tween Saudi Arabia and theprevious Somalia administra-tion, according to two seniorinternational-community offi-cials briefed on the matter.Saudi officials didn’t respond torequests for comment.
Now guarded by the ragtagSomali National Army, most ofthe containers have been lan-guishing in temperatures higherthan 100 degrees for months,raising concerns the ammuni-tion will be siphoned off towarring militias or to al-Sha-baab, or explode in the heat.
“This is just the perfect ex-ample of how things could liter-ally explode in the current envi-ronment,” said a seniorWestern diplomat. “If there’sconflict…it will spread likewildfire.”
SAUD IA RAB I A
J O R .
I S R .
Y EMEN
OMAN
I R ANI RAQ
QATAR
U . A . E .
E GY P T
SUDAN
SOUTHSUDAN
E TH I O P I A
K ENYAUGANDA
D . R . C .
E R I T R E A
DJ I B OU T I
S OMA L I A
SOMALILAND
RedSea
Gulf of Aden
IndianOcean
Med. Sea
PersianGulf
SuezCanal
Berbera
Mogadishu
Hobyo
Bosaso
Assab
Suakin
Kismayo
Baraawe
Planned or operational sites
Military Commercial
Undetermined
Areas with incidents of conflictin or near the Horn of Africa
Major shipping routes (schematic)
AffiliationU.A.E.
Turkey
Allies
Allies
China
Qatar U.S.
FranceSaudi ArabiaItaly
Japan
Undetermined
THEWALL STREET JOURNAL.Sources: The governments, DP World, P&O Ports, Frontier Services Group, Albayrak Group,staff reports and people familiar with the matter (planned/operational sites)
New Focus on Strategic ZoneWorld powers have spent billions in recent years to build ports and military bases inthe Horn of Africa region, which is strategically located on important shipping routesand in the midst of conflict zones.
Ruun Ali, in her tea shop in Berbera, said she hoped the port investment would help the local economy.
over the port here. Elsewherealong the Horn of Africa, alliesSaudi Arabia and U.A.E. havesnapped up ports and militarybases at sites in Somalia, plusfarther north in Djibouti andEritrea. Qatar and Turkey,which support a differentmodel of political Islam and arecloser to Saudi Arabia’s arch-ri-val Iran, are building in Somaliaand Sudan. China is positionedwith a military base and a con-tainer port, for which it paid$700 million, in Djibouti and isexploring sites in Somalia. TheU.S., meanwhile, conducts Af-rica operations and directsdrones in the Persian Gulf fromCamp Lemonnier in Djibouti,the largest U.S. base on thecontinent.
The scramble to lock downcritical sites like Berbera is un-scrolling all along the Horn andnorthward into the Red Sea. Atstake is the precarious peace inone of the world’s most volatileand strategic corners, and thebalance of power in the MiddleEast. The nearby Suez Canal,meanwhile, is the fastest andmost heavily used shipping laneconnecting Asia with Europe. Ithandles about 10% of theworld’s seaborne trade, includ-ing roughly 10% of the world’soil trade, according to theUnited Nations and the U.S. En-ergy Information Administra-tion.
“We have new kids on theblock…competition in the Mid-dle East between the Sunnisand the Shias, and the Ameri-cans, the Russians, the Turks,the Qataris,” said Saad AliShire, Somaliland’s foreign min-ister. “It’s a poisonous meetingof interests coming together.”
Berbera and other sitesalong the northern coast of theHorn are important because oftheir proximity to Yemen, astage for the rivalry betweenIran and Saudi Arabia acrossthe Middle East. Saudi Arabiahas been fighting a war thereagainst Iran-backed Houthi reb-els since 2015 with the supportof allies like the U.A.E. Iran de-nies arming or training theHouthis.
The United Nations and in-dependent investigators sayIran has used ports in Sudanand Somalia to smuggle weap-ons to Hezbollah and to allies inYemen. In support of the otherside in Yemen, a vast U.A.E.military base erected in isolatedand secretive Eritrea in 2016has been a launching pad fordrones and jet strikes into thebattle zone.
Other complications abound.Saudi Arabia and its allies areconcerned about jihadistgroups, including Islamic Stateand al Qaeda affiliates, gainingstrength in the Arabian penin-sula.
And Saudi and U.A.E.’s breaklast year with Qatar, claimingthe Gulf state supports terror-ism, upended traditional alli-ances. The diplomatic crisisspurred a realignment of dealson the poor and conflict-proneAfrican coast, where Somalia,Djibouti, Eritrea and Sudanhave welcomed more than $2billion in investments from thericher Middle East nationssince 2016.
“Turmoil in the Gulf hassharply escalated the Horn’s al-ready dangerous militariza-tion,” said Rashid Abdi, an ex-pert on the region at theInternational Crisis Group, aBrussels-based global geopoli-tics think tank. “Gulf powerswant to control this region tosupport an economic futurethat doesn’t fully depend on oil
ContinuedfromPageOne
MideastPowerStruggle
U.A.E.’s DP World took over the port in Berbera, Somaliland. Saudi Arabia, Turkey, China and others have made investments on the Horn of Africa coast in recent years.
TOMMYTR
ENCH
ARD/PANOSFO
RTH
EWALL
STR
EETJOURNAL(3)
IN DEPTH
production, and to be ready fora potential future war withIran.”
The situation has left Wash-ington in a diminished positionof influence, Western diplomatssay. The U.S. has few commer-cial investments in the regionbut has spent tens of billions ofdollars on military programs,including efforts to fight piracy,in recent decades, and has in-creased drone strikes and spe-cial-forces deployments againstjihadists in Somalia.
“There’s no evidence thatthere’s a coherent U.S. strategyto deal with divisions in theHorn and the militarization ofthe Red Sea,” said Payton Knopfof the United States Institute ofPeace, a Washington-basednonpartisan think tank.
State Department officials
didn’t respond to requests forcomment.
Tensions flared in May whenChinese military personnel atits Djibouti base used a high-powered laser to harass U.S.flight crews from Camp Lemon-nier, the Pentagon said.
The maneuvering for terri-tory has drawn a motley crewof actors, including U.A.E. state-owned shipping giant DPWorld; a Turkish conglomerateowned by the family of Presi-dent Recep Tayyip Erdogan’sson-in-law; and Navy-SEAL-turned-businessman ErikPrince, who wants to develop aport south of the capital Moga-dishu. France and Japan havemilitary bases, and Russian en-tities are scouting for deals.
Sudan, which ditched a long-standing alliance with Iran tosecure desperately needed in-vestments from Saudi Arabia, iscontributing some 5,000 troopsto the war in Yemen, and hasbeen carefully straddling bothsides of the Middle East rift ina bid to save itself from eco-nomic collapse.
In December, Turkey securedthe rights to develop Suakin Is-land, a former Ottoman outpostin Sudan. Qatar in Marchreached a preliminary agree-ment with Sudan to spend $4billion developing a nearby porton Sudan’s mainland that hostsa passenger ferry to the Saudiport of Jeddah. If finalized, itwill be the biggest single
Since antiquity, ithas been coveted by
military andmaritime powers.
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | A13
Stanford, Calif.
P resident Trump may notbe a friend of interna-tional trade, but he’s agift for a trade econo-mist. Douglas Irwin has
just hauled himself across thecountry from his perch at Dart-mouth College to lecture on thepresident’s trade policy. His talk istitled “Exercise in Futility.” Thenext day, he and his massive suit-case will fly west to Singapore formore lectures on the same insis-tent theme.
The president is clobbering al-lies and adversaries alike withprotectionist tariffs, and it seemseveryone wants to hear from Mr.Irwin, 55, who last year published“Clashing Over Commerce,” a his-tory of U.S. trade policy. We’re sit-ting in a little office in the shadowof Stanford’s Hoover Tower,named for the president whosigned the Smoot-Hawley Tariff in1930, America’s last exercise inunabashed protectionism.
Mr. Irwin is at pains to pointout the differences between thetwo men. “Trump has escalatedthe rhetoric on trade to somethingwe’ve never seen in previous pres-idents,” he says. “Even HerbertHoover never bad-mouthed othercountries and said we’re beingmanipulated and taken advantageof, and we’re losing.” Sure, Hooverwould “always talk about the needto protect domestic industry fromforeign competition—but in a verydispassionate, neutral way.”
Mr. Trump may be the firstopenly protectionist presidentsince Hoover, but what Mr. Irwinfinds most frustrating about himis that “he never really defineswhat a ‘better’ trade deal is. Hisjudgment of trade comes downto the trade balance, which heuses as a sort of ledger, as abusinessman would, rather thanthink more broadly about the na-tional economic impact of trade.”It is impossible for every countryto run a trade surplus, but“Trump thinks about trade inthese zero-sum terms, aboutwhether there’s profits or losses,and he views exports as goodand imports as bad.”
That may be because Mr.Trump “comes from the casino in-dustry, the real-estate industry,where you either get the projector not; you either win against thehouse or you lose against thehouse.” He fails to see that in in-ternational trade, imbalances“aren’t an indication that onecountry is beating another, orthat one is ‘winning’ and theother’s ‘losing.’ ” Mr. Trump’srhetoric and vocabulary are “notthe way economists think abouttrade at all.”
Yet the world must reckon withthe trade-deficit-phobic presidentand advisers such as Commerce
Secretary Wilbur Ross andespecially Peter Navarro,director of the White HouseNational Trade Council. In-voking the national-securityprovisions of the Trade Ex-pansion Act of 1962, knownas Section 232, Mr. Trumphas just imposed steel tar-iffs on a range of countries,including many military al-lies. Mr. Irwin is aghast.“This is a huge and unwar-ranted slap,” he says, “sureto bring retaliatory blow-back against American ex-porters. And thus a triple-harm: It hits U.S. steel-consuming industries andU.S. exporters, and hurtsnational security by alien-ating friends.”
Mr. Trump has also sig-naled that he will use Sec-tion 232 to impose tariffson imported automobilesand auto parts. Under whatearthly scenario are Japa-nese cars a threat to U.S.national security? Mr. Irwintreats the question as rhe-torical and explains thatthe statute is “the easiest,least reviewable way inwhich a president can im-pose tariffs. Like steel, nationalsecurity seems to be just a pre-tense for what is pure protection.”
There is no import surge put-ting America’s automobile indus-try at risk, Mr. Irwin says. To thecontrary, “the domestic industry isat a high level of capacity utiliza-tion.” In 2017, 56% of American-bought light vehicles were domes-tically produced. The breakdownamong imports: 22% from Canadaand Mexico, 11% from Japan, and8% from Germany and South Ko-rea. That adds up to 97% of carsthat were either made in Americaor “came from neighboring coun-tries or those we have an alliancewith—not enemies or sources ofsupply that might be threatenedin an emergency.” If Defense Sec-retary Jim Mattis “did not thinkthere was a national case for steel,it’s hard to think the defense es-tablishment would believe there’sa national-security case for impos-ing tariffs on cars.”
Steel is a leitmotif in PresidentTrump’s narrative of trade-drivenindustrial decline. But the steel in-dustry, Mr. Irwin says, isn’t “beingdecimated by import competition.Imports as a share of domesticconsumption are pretty stable—weproduce 73% of all the steel weconsume. So it’s not as thoughwe’re completely dependent andwe’ve lost that industry.”
The U.S. has lost steel jobs, butMr. Irwin says that’s because thedomestic industry has becomemore productive. “In 1980, it usedto take 10 worker-hours to pro-duce a ton of steel. Today, it takesless than two worker-hours. Soeven though we’re producing thesame amount of steel, or evenmore, we use many, many fewerworkers to produce that steel.”
That old newsreel image ofworkers mixing metals next to fur-naces is far from today’s reality,which consists of “one or two en-gineers who are adjusting dials ina highly mechanized place.” Bring-ing back those blue-collar jobs “isjust not in the cards,” says Mr. Ir-
win, who attributes the presi-dent’s insistence otherwise to nos-talgia—“reflecting back onAmerican greatness after WorldWar II, and trying to recapturethose days. Wilbur Ross had a lotof ties to the steel industry.”
Even Messrs. Ross and Navarro,“have never fully articulated theirprotectionist arguments,” Mr. Ir-win says. “I have the sense thatthey both have protectionist in-stincts rather than well thought-out strategies.” Both men “seemto pine for yesteryear when thebig industries were autos andsteel, and there was no foreigncompetition in sight. They seemvery uncomfortable in the irrevo-cably globalized world of today, inwhich growth sectors are basedon high-tech and intellectual prop-erty.” Mr. Navarro, he continues,thinks free trade arguments are“outmoded,” and has a particularanimus against China.
Few economists would disagreethat the U.S. has serious problemsin its economic relationship withChina, and Mr. Irwin points outthat matters have become worseas China has “moved away from amore market-oriented approach”under President Xi Jinping, “who’sembracing a more mercantilist ap-proach, or even an overtly protec-tionist one in parts of his ‘Made inChina 2025’ initiative”—Beijing’smaster-plan to bolster its high-tech industries.
T he U.S., Mr. Irwin says,needs strong allies in Eu-rope and Asia to “counter
China when it violates the letteror spirit of its World Trade Organ-ization commitments, and theTrump administration has donelittle to cultivate such allies. In-stead, it seems bent on alienatingthem.”
Mr. Navarro, author of a bookcalled “Death By China,” takes adifferent view. He has spoken of“repatriating the supply chain,bringing it all back home,” in Mr.Irwin’s paraphrase. “While this
hasn’t become explicit administra-tion policy, it does reflect Na-varro’s broader anti-globalizationsentiment. If undertaken, it wouldtear apart the system of trade theU.S. has sought to create over thepast 70 years.”
As for Mr. Ross, Mr. Irwin sayshe seems to emphasize reciprocity“quite a bit” and he “likes to pickinstances in which U.S. tariffs arelower than those in Europe orAsia.” For example, Mr. Ross jux-taposes the 10% European Uniontariff on cars with the U.S. tariffof only 2.5%—but neglects to men-tion the 25% U.S. tariff on trucks.“If he were really concerned abouthigher foreign tariffs, he’d proposea free-trade agreement with suchcountries, bringing all tariffs downto zero,” Mr. Irwin says. Thatwould be “pure reciprocity, andpresumably a ‘winner’ for the U.S.,since other countries would haveto cut their tariffs more than theU.S. would.” Instead, Mr. Rosspushes for raising tariffs on U.S.imports, which “handicaps down-stream user-industries by inflict-ing higher costs on them andpushes up prices for consumers.”
Mr. Irwin acquired his penchantfor free trade when he studied atColumbia, where Jagdish Bhagwatiwas his doctoral adviser. Mr.Bhagwati, 83, still teaches eco-nomics at Columbia, and Mr. Irwinpoints to his “seminal contributionto trade theory, which was todelink free trade from laissez-faire, as well as to point out thatcountries will grow more rapidlyby exporting rather than throughimport-substitution.”
Mr. Irwin’s other inspiration isCordell Hull, “a deeply under-rated figure.” Hull was the lon-gest-serving U.S. secretary ofstate, in office from 1933 to 1944.He was awarded the Nobel PeacePrize in 1945 for helping to cre-ate the United Nations and hewas, Mr. Irwin says, “one of thecreators of the postwar interna-tional trade architecture. Hisview was that world trade dove-
tailed with world peace.”What would Hull have
made of Mr. Trump’s tar-iffs? “He would be horriblydismayed,” Mr. Irwin an-swers, “and would contendthat a turn toward a moreprotectionist Americawould make the world amore dangerous place byincreasing economic fric-tion and fragmenting alli-ances.” Hull would also “la-ment the loss of Americanleadership in trade rela-tions as a rejection of the‘destiny of history.’”
The U.S. must now con-tend with China, which ispushing hard to usurpAmerica’s global leader-ship—and not merely inthe sphere of trade. Chinahas a “strategic blueprintfor where it wants to go,”Mr. Irwin says. “Trump, incontrast, has these tradeinstincts but no plan.” Theobsession with reducingthe bilateral deficit withChina appears to haveblinded the administrationto the need to address “thereal structural problemswe should be talking about,
like protecting intellectual prop-erty, transparency, whether youneed to partner with a Chinesefirm if you go in as a foreign in-vestor, and the rule of law.”
America’s relationship withChina, one might say, is unprece-dented in history, being the firstexample of two world powers thatare so interdependent in tradeeven as they grapple for global su-premacy. “The two economies areintermeshed in terms of supplychains,” says Mr. Irwin, “as well asin the direct investment that U.S.firms have made there.” UnlikeJapan in the 1980s, which movedvery quickly to accommodate theU.S. when President Reaganthreatened protectionism, “Chinahas a lot of threat points thatwould enable it to retaliateagainst the U.S.”
M r. Trump would like to seethe trade deficit go downand U.S. manufacturing re-
vived. But “his macroeconomicpolicies are almost guaranteed tolead to larger trade deficits, not toa smaller one,” Mr. Irwin says.Since Mr. Trump took office, theU.S. has cut taxes and raised gov-ernment spending, so that the fis-cal deficit is going up. The tradedeficit often shadows the fiscalone, because exports get crowdedout when the Federal Reservetightens credit and the dollar ap-preciates. “We’re then going to getcapital inflows from abroad,” Mr.Irwin says, “and the trade deficitis going to go up.”
So, thinking of trade as a pro-cess of “reaching these deals,where China agrees to buy more,doesn’t add up to a lower tradedeficit if you have these big mac-roeconomic forces moving exactlyin the opposite direction.” Mr. Ir-win predicts that Mr. Trump “isgoing to be very frustrated at theend of the first term.”
Mr. Varadarajan is a fellow atStanford University’s HooverInstitution.
Why Trump’s Protectionism Is Futile
ZINASA
UNDER
S
The president is wrong toattribute industrial declineto foreign competition,and the rising dollar islikely to cause thetrade deficit to rise.
THE WEEKEND INTERVIEW with Douglas A. Irwin | By Tunku Varadarajan
OPINION
The Hostile Occupation of Carlos Lopez’s HousePalmdale, Calif.
If Carlos Lopez livedanywhere but Cali-fornia, he could haveforced the squatterout of his modestrental house monthsago. But here anyeviction defendant,even one who hasadmittedly refusedto pay the rent, can
get a free attorney and demand ajury trial as leverage. That’s whatthe woman occupying Mr. Lopez’shouse in northern Los AngelesCounty did. Only ethics or ignoranceprevents every evictee from doingthe same.
As Mr. Lopez’s lawyer, I was skep-tical when he told me someone wasliving in his house without paymentor permission—until I discoveredthat my firm had helped evict thesame woman from three other areahouses. The difference this time wasthat the squatter had an attorney,provided by a state-funded nonprofitwhose mission is to reduce evictions.As a result, she could practically de-cide for herself when and how shewould leave.
Like many small-time landlords,Mr. Lopez, a landscaper, couldn’t af-ford a lawsuit costing anywherefrom $8,000 to $20,000. He wasdealing from a nearly powerless po-sition with someone to whom, he
says, he never agreed to rent andwho never paid him a cent. He saysshe showed up after his former ten-ant went to jail.
“This is not worth it,” Mr. Lopezsaid of being a landlord. He hopes tosell the house, which he inherited,once it’s vacant.
Historically, eviction was intendedto be faster and simpler than othercivil litigation so that landlordscould quickly reclaim their propertyfrom deadbeat tenants. In California,jury trials for evictions were nearlyunheard of until the mid-2000s, asthey still are in other states. Mostresidential leases included jury waiv-ers, and most tenants couldn’t affordthe legal expense of a jury trial.
That changed in 2005, when theCalifornia Supreme Court ruled jurywaivers unenforceable. Lawyersswarmed to represent tenants free,making money by demanding land-lords pay tenants thousands of dol-lars to leave. Landlords pay becauseit’s cheaper than litigation.
Legal-aid attorneys now use simi-lar tactics. Their presence in evictioncourts has increased since 2011 be-cause of the Sargent Shriver CivilCounsel Act, which provides $9.5million a year of state funds for freelegal help in civil cases. (It alsofunds offices within the Los AngelesCounty courthouses that give evic-tion defendants free help preparingtheir documents.) Even attorneys
who don’t demand payoffs seek sev-eral free months of residence, awaiver of unpaid rent, a sealed judg-ment, and a reference letter from thelandlord so that future landlordswon’t know the tenant’s history.
Many tenant advocates think thisshould be the norm. In San Fran-cisco, a proposition on next Tues-day’s ballot would give all evictiondefendants the right to a city-fundedattorney, regardless of income or
reason for eviction. Tenants with at-torneys always demand discovery,depositions and a jury. This driveslandlords’ legal costs up from thetypical flat fee of several hundreddollars to tens of thousands.
That would be great for attorneysand for tenants who don’t pay theirrent. It’s bad for tenants trying toenter the crowded San Franciscorental market and for the alreadysluggish court system. As wordspreads among landlords that refer-ences and civil records are unreli-able, they’ll focus on other ways tovet tenants, such as credit checks.
But many people with low credit rat-ings still prioritize their rent, so asystem that protects bad tenants pe-nalizes many trustworthy applicantswho happen to be poor.
Lawyers at my firm have ap-proached legislators about makingchanges to the law, but no politicianwants to be branded anti-tenant—es-pecially when activists and scholarsblame evictions for homelessness.
The data suggest that assump-tion is wrong. California’s evictionrate is among the lowest in the na-tion and falling, according to re-search by the Eviction Lab atPrinceton University. Meanwhile,California’s homeless rate is thethird-highest and rising, and thehighest in the nation for unshel-tered homeless, according to theDepartment of Housing and UrbanDevelopment. Hawaii and New York,the two states with higher overallhomeless rates than California, alsohave below-average eviction rates.
Contrast those states with Con-necticut, where the eviction rate isthree times California’s. The home-less rate is less than a third as highand has fallen substantially since2010. If a tenant contests an evictionin Connecticut, the landlord can de-mand rent payments be made to thecourt while the case is litigated. Au-tomatically answering nonpaymentevictions with check-the-box disre-pair claims doesn’t have the same
tactical advantage as in California.Even without the jury demands,
California’s eviction system is toughon landlords. In northern Los Ange-les County, answering an evictionbuys the tenant at least two months,because that’s how long it takes toget to trial. If a tenant refuses tocomply with a court-approved evic-tion, it takes police at least a monthto enforce it.
The 2008 housing-market crashhit this part of Southern Californiahard. A decade later, many home-owners are still underwater or havelittle equity. Many who inheritedhouses or wanted to move chose tobecome landlords rather than sell ina down market. Many, like Mr. Lo-pez, use rental income to pay theirmortgages. Some rent rooms in theirown homes to make ends meet.
California law treats these part-time landlords no differently fromwealthy owners of multiple proper-ties. But working-class landlordsdon’t have deep pockets for litiga-tion. Some, like Mr. Lopez, quit rent-ing properties after feeling extortedby the system. Others let the prop-erty slide into foreclosure. Everytime this happens, California’s short-age of affordable housing getsworse.
Ms. Fountain is an attorney atCharlton Weeks LLP and a part-timelandlady.
Under California law,deadbeat tenants andeven squatters can ruinworking-class landlords.
CROSSCOUNTRYBy RikkaFountain
.
�
A14 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
Million-Dollar Man? This Is Proof of IdiocyOrthodontist Mike Meru cannot be
blamed for putting in place a systemthat in the end, after 25 years, al-lows the eventual discharge of hismillion-dollar-plus educational debtonto taxpayers, many of whom couldnever dream of earning over$200,000 a year, and likely helpedtheir own kids get through collegeand beyond (“The $1 Million StudentLoan: ‘Should I Be Doing This?,’”page one, May 26). Some millennialswith broad cultural support to pur-sue their dreams seem to be underthe impression that their fellow tax-payers are somehow obliged to fi-nance those experiences. The con-cern for many is how are thiscountry’s interests advanced by sub-sidizing a well-intentioned educa-tional-loan system apparently with-out sufficient taxpayer safeguards orloan limitations?
PAUL E. ZIMAN, D.D.S.Minneapolis
The student-loan program wasonce a program that helped close afunding gap for students wanting acollege education. The program todayhas dramatically inflated the cost ofcollege, led to a proliferation ofworthless degrees, and now providesme the privilege of paying the cost ofother people’s bad decisions.
MICHAEL J. LALLYOverland Park, Kan.
Student-loan programs’ structuralflaw is that they focus concerns forrepayment on taxpayers and the stu-dents/borrowers while ignoring theschools themselves. This has resultedin rampant creation of too many
loans. Many graduates are burdenedwith obligations they can never ful-fill, and the taxpayer is left to payfor ever-more defaulted loans.There’s no incentive for schools notto make a loan. By the time the issueof nonpayment arises, their formerstudent is long gone. The remedy issimple. In order to participate in theloan program, schools should becomeliable for some percentage of futuredefaults. This could be 5%, 25% ormore. The consequence will be thatschools will turn their attention fromshort-term considerations such asmaking students happy and thequantity graduated to considerationsof whether the loan represents aworthy risk of their resources.
DON W. BROWNLos Angeles
It’s time for Uncle Sam to get outof the student-loan business.
STEVE LENNARTWarrenville, Ill.
My dad would tell us about goingto dental school at the University ofMaryland, Baltimore, at the height ofthe Great Depression. According toDad’s story, he shows up on the firstday of class and pleads poverty tothe dean, who inquires whether hecan afford to pay half tuition. Dadsays no. Dean then asks if he can payany part of the tuition. Dad againsays no. So Dean offers to waive thetuition requirement, so long as Dadpromises to donate to the schoolonce he goes into practice. And that’sprecisely what Dad did.
JON FOXLinwood, N.J.
LETTERS TO THE EDITOR
Letters intended for publication shouldbe addressed to: The Editor, 1211 Avenueof the Americas, New York, NY 10036,or emailed to [email protected]. Pleaseinclude your city and state. All lettersare subject to editing, and unpublishedletters can be neither acknowledged norreturned. “The fish sticks here are very good.”
THEWALL STREET JOURNAL
You Wouldn’t Think Sea Level Is So ComplexProf. Fred Singer (“The Sea Is
Rising, but Not Because of ClimateChange,” op-ed, May 16) is right:CO2 emissions have no detectable ef-fect on sea-level rise. Profs. AndreaL. Dutton and Michael E. Mann(May 22 letter) claim, without mea-surable evidence, that human-causedclimate change raises sea levels.
Sea-level is rising in some placesand falling in others. Globally, sealevels are very slowly rising, but“human-caused climate change” can-not be the cause, because the rateof rise is no greater now than whenthe first Model A rolled off Ford’sassembly line.
Since precise measurements be-gan, mean atmospheric CO2 levelhas risen for 58 consecutive years,with no detectable acceleration ofsea-level rise. Clearly, human-caused warming doesn’t signifi-cantly increase the rate of sea-levelrise.
Profs. Dutton and Mann also sup-pose the Antarctic ice sheet simplymust lose ice in a warming climatebecause of “basic physics.” That’salso nonsense. Most of Antarcticaaverages far below freezing, so afew degrees of warming won’t meltit. Melting decreases ice-sheet massbalance, while snowfall adds to it,offsetting sea-level rise. Multiplestudies confirm accumulating snowon ice sheets increases as the cli-mate warms, the result of down-wind “ocean effect snowfall.”
Compelling evidence shows globalwarming from fossil-fuel use ismodest and benign, and higher CO2levels measurably benefit agricul-ture and natural ecosystems, out-weighing hypothetical harms.
DAVID BURTONCary, N.C.
THOMAS WYSMULLERNASA meteorologist (Ret.)
Ogunquit, Maine
The North Helped Reconstruction’s FailureDavid S. Reynolds’s review of Allen
C. Guelzo’s “Reconstruction: A Con-cise History” (Bookshelf, May 22) isincomplete and misleading. The de-termining reason for the failure, andit was a failure, of Reconstructionwas the pervasive white Northern an-tiblack attitude during and after theantebellum period. The North wonthe war decisively; with the Confed-eracy in shambles, the South couldnever have thwarted Northern effortsto bestow full citizenship on formerslaves. White Northerners who op-posed slavery on moral (and eco-nomic) grounds, were mostly anti-black and weren’t about to shedwhite Southern blood for black rights.
The biggest racial fear of the ante-bellum white North was a black mi-gration northward. The black aboli-tionist Samuel R. Ward summed upNorthern attitudes in the 1840s:White abolitionists “best love the col-ored man at a distance.” The Southprovided the distance. Lincoln’s righthand, William Henry Seward, despiteimpeccable abolitionist credentialsdidn’t mince words: The “African race
here is a foreign and feeble element .. . incapable of assimilation.”
During the Civil War, both Illinoisand Massachusetts blocked the reset-tlement of slave refugees. Republican-appointed Supreme Court justiceseviscerated civil-rights legislation.President Grant didn’t send troops toMississippi when black suffrage wasoverturned. Republican GeorgeBoutwell even admitted that civilrights were an “expediency” to keepfreed slaves in the South.
The North’s black populationstayed at 2% while millions of whiteimmigrants settled there. This wouldchange only when World War I pro-duced a labor shortage which ignitedthe Great Migration of blacks north,where race riots ensued. Racial sepa-ration became a fixture of the nationlong before the Kerner Commission(1968) belatedly acknowledged Amer-ica’s “two societies.”
GENE DATTELLakeville, Conn.
Jailed for Practicing IllinoisPolitics: Quelle Surprise
It appears that former IllinoisGov. Rod Blagojevich (“I’m in Prisonfor Practicing Politics,” op-ed, May29) seems to have forgotten that inJune 2011 the jury found him guiltyof 11 counts related to trying to sellthe Senate seat vacated by BarackObama and six counts related tofundraising extortion. Unless, ofcourse, he still considers those ac-tions “routine practices of politicsand government” (his words)which, given that he had heldelected office in Illinois, is verypossibly correct.
JIM MUELLERIndianapolis
Pepper ...And Salt
1941 Was a Squeeze Too FarRegarding your editorial “Putting a
New Squeeze on Iran” (May 22): Weput the squeeze on Japan in early1941. What happened then?
JOHN FRAYRye, N.Y.
Singapore or Bust
T he Trump Presidency is often harrow-ing but never dull, so perhaps it was in-evitable that a summit between Donald
Trump and North Korean dic-tator Kim Jong Un would beback on again. The two adver-saries who were publiclytrading schoolyard taunts afew months ago will nowmeet on June 12 in Singaporeafter all, and the only thing we can say withany confidence is that no one has a clue whatwill happen.
Mr. Trump announced that the summit isback on a week after he cancelled it amid NorthKorean insults and unanswered phone calls. Butin a sign of the surreal nature of this diplomacy,Kim then sent a top emissary who is on the U.S.sanctions list, Kim Yong Chol, to meet in NewYork with Secretary of State Mike Pompeo. OnFriday Kim Yong Chol met with Mr. Trump formore than an hour in the Oval Office, and thesummit was full speed ahead.
“I think we’re over that, totally over that,and nowwe’re going to deal and we’re going toreally start a process,” Mr. Trump said at theWhite House. “The relationships are buildingand that’s a very positive thing.” Asked if theNorth had committed to giving up its nuclearweapons, Mr. Trump said, “I think they want todo that. I know they want to do that.”
But there is the rub. If the North is commit-ted to giving up its weapons, it hasn’t said sopublicly. It has merely committed to a diplo-matic process and a “phased” denuclearizationin return for certain unspecified concessionsfrom the U.S. But that is also what the Northcommitted to do in the 1990s and again in the2000s only to continue its nuclear work in se-
cret and eventually toss out United Nations in-spectors.
The summit will be an immediate propa-ganda coup for Kim, a sanc-tioned rogue who will appearon the world stage with a U.S.President for the first time.The question is what Mr.Trump will be able to takeaway beyond the photos of a
presidential meet and greet. Mr. Trump isnothing if not confident in his negotiatingabilities, and he clearly savors dominatingworld attention with this kind of made-for-global-TV drama.
But he also isn’t known for mastering policydetails, and it was only days ago that the Northreleased three American hostages aftermonths of captivity, and only months ago thatit essentially murdered American tourist OttoWarmbier after arresting him for trying totake home a wall poster.
On Friday Mr. Trump ignored all that andsaid “I don’t want to use the term maximumpressure anymore. I don’t want to use thatterm.” He added that “we’re getting along. Yousee the relationship. It’s not a question of maxi-mumpressure.”Mr. Trump always overdoes thediplomatic flattery, but no one should forgetthat Kim and his family run a country that is es-sentially a prison for millions—and a literalprison for tens of thousands.
Perhaps a summit like this is worth tryingsince nothing else across four American Presi-dencies has worked to stop the North’s drive tobecome a nuclear power that can strike the U.S.We certainly hope for success, but Mr. Trumpwill have to be prepared for the consequencesif Kim is merely there for the show.
Trump gets thesummit he wantswith Kim Jong Un.
The Catholic School Difference
F or the thousands of nuns who haveserved as principals at Catholic schools,their emphasis on self-discipline must
seem like common sense. Buta new academic study con-firms the sisters are on tosomething: You can instill self-discipline in students, a virtuethat will help them in theirstudies and later in life.
The study was conducted for the Thomas B.Fordham Institute by University of California-Santa Barbara associate professor MichaelGottfried and doctoral student Jacob Kirksey.The authors analyzed two waves of nationaldata on elementary school students collectedunder the Early Childhood Longitudinal Studyfor the National Center for Education Statis-tics. They compared children in Catholicschools with those in public schools and otherprivate schools, religious and secular.
The authors found statistically meaningfulevidence that students in Catholic schools exhib-ited less disruptive behavior than their counter-parts in other schools. “According to their teach-ers, Catholic school children argued, fought, gotangry, acted impulsively, and disturbed ongoingactivities less frequently,” the authors write.Specifically, students in Catholic schools “weremore likely to control their temper, respect oth-ers’ property, accept their fellow students’ ideas,and handle peer pressure.” In otherwords, theyexhibited more self-discipline.
The authors concede their findings aren’tcausal,meaning theremight beunobservable dif-ferences between students in different schoolsthat account for the striking differences theyhave found. But the correlation is strongbetweenthe focus that Catholic schools put on self-disci-
pline and better student behavior.We also knowthat, especially in urban areas, black and Latinostudents who attend Catholic schools show
higher achievement, highergraduation rates and highercollege enrollment than thoseat nearby public schools.
At a time when the differ-ent suspension rates betweenminority and non-minority
students has become a toxic debate, the authorsoffer three key judgments:
First: “Schools that value and focus on selfdiscipline will likely do a better job of fosteringit in children.” If other schools “took self disci-pline as seriously as Catholic schools do, theywouldn’t have to spend as much time, energyand political capital on penalizing students” forbad behavior.
Second: “Assuming that these results reflecta ‘Catholic Schools Effect,’ other schoolsmightconsider both explicit and implicit methods toreplicate it.” The report notes that some “no ex-cuses” charter schools are already doing this,through the curriculum or theway students in-teract with adults and teachers whomodel self-discipline themselves.
Third: “Don’t underestimate the power ofreligion to positively influence a child’s behav-ior.” Religion isn’t the only way to foster self-discipline, the authors emphasize, but it’s ef-fective compared to most of the alternativesin channeling youthful energy into productiveself-control.
Though the authors offer no easy prescrip-tions, they do say it is a “tragedy for the nation”that somany Catholic schools continue to closewhen they are most needed. Their lessons areworth preserving.
A new study shows thebenefit of demandingstudent self-discipline.
The Rising Jobs Tide
T he U.S. economy is picking up speed,and it’s paying dividends in an expand-ing job market. The Labor Department
reported Friday that the un-employment rate fell inMay to3.8%, an 18-year low, whilemore workers are joining theparty from the sidelines. Pres-ident Trump’s tax reform andderegulation agenda appearsto be working, assuming his protectionist tradepolicies don’t interfere.
Employers added 223,000 jobs in May, ex-ceeding themonthly average of 191,000 over thelast year. Although labor-force participation re-mains stuck at a stubbornly low 62.7%, the re-port’s details show that workers who are oftenon the edges of the economy see opportunitiesworth grabbing. Notably, the number of peoplewho have been jobless for 27weeks ormore hasfallen by 476,000 over the last year. The numberof full-time workers has increased by aboutthree million while part-timers have droppedby 457,000.
In particular good news, the jobless rate con-tinues to fall for workers with less than a highschool diploma (5.4% from 6.2% a year ago) andblack Americans (to 5.9% from 7.6%) as 208,000blacks joined the labor force. Workers age 25to 34 made up 1.04 million of the 2.58 millionjobs added over the last year while those over55 contributed 1.08 million. Job and wagegrowth may finally be inducing young peopleout of their parents’ basements.
All of this fits with the anecdotal news fromemployers who say they can’t find enoughworkers. Manufacturers have reported employ-ing high-school students. In Maine where theunemployment rate has dipped to 2.7%—thelowest in more than 40 years—a temp agency
has built a thriving business out of hiring andrehabilitating convicted felons who have servedtheir time.
Amid stiff competition forworkers, employers are alsoraising wages, which haveclimbed 2.7% in the last 12months but showed signs ofaccelerating with a 0.3% in-crease inMay. This is less than
what some economists project at such a lowjobless rate, but the aggregate figure may besomewhat depressed by the huge increase inemployment among lower-skilled workers.
A Chick-fil-A in Sacramento this week saidthat it would increase worker pay to $17 perhour to reduce employee turnover. Walmartthis week announced plans to subsidize collegetuition for employees. The Journal last week re-ported that a Colorado company is trying tolure more plumbers by offering craft beer, aputting green and “a lot of Zen.” We’d prefercash, but we won’t judge millennials.
Despite glum headlines of Sears closing doz-ens of stores, retail jobs increased by 31,000 lastmonth and 125,000 over the last year. Employ-ment in construction has swelled by 286,000since May 2017.
The Labor Department last month reported6.6million job openings. The tight labormarketunderscores the need for more seasonal guestworkers, and the Labor Department ought toapprovemore H-2B visas tomeet the economicdemand this summer. Immigrants aren’t steal-ing jobs from Americans; they are creatingmore opportunities for economic growth.
In the last year business confidence has im-proved, investment is increasing and workersare reaping the benefits. Please don’t blow itwith a trade war, Mr. President.
Faster growth is drawingworkers off the sidelines,but will tariffs interfere?
REVIEW & OUTLOOK
OPINION
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | A15
trust think close to home. If yourteenager judges an institution calledBusiness in America by the billion-aire hedge funder spouting inanethoughts on cable TV with a look onhis face that says “See how originalI am!” then capitalism is doomed.You can’t make your teenager ad-mire slippery, rapacious tech gods inSilicon Valley. But if your childrenunderstand business in America asmodeled by you—as honorable menand women engaged in an honorablepursuit—then they will have respectfor the institution if business. If forno other reason be honest in yourdealings, be compassionate, and pro-vide excellence.
Realize there’s a difference be-tween skepticism and cynicism, thatone is constructive and the otherchildish.
Skepticism involves an intellec-tual exercise: You look at the grandsurface knowing it may not reflectthe inner reality. It implies action: Ifit doesn’t, try to make it better. Cyn-icism is a dodge: Everything’s crud,you’d be a fool to try and make itbetter, it’s all irredeemable and un-changeable.
Be skeptical of our institutions,not cynical toward them.
For those who operate on anylevel of our public life, hear this:Some of our problems can be re-solved or made less dramatic and as-saultive by an old-fashioned conceptthat used to exist in American publiclife. It is called tact. We are in an ep-idemic of tactlessness, which is anabsence of respect for the otherside, for whoever is on that side. Itis an utter lack of generosity andsensitivity.
“Bake my cake” is, among otherthings, a stunning example of lack oftact. You’re supposed to win gra-ciously, not rub the loser’s face in it.
If you are, say, in the U.S. Con-gress, where both parties failed fora quarter-century to regulate ourborders effectively, and those forcedto live with the results of that dero-gation rise up and demand action,the correct response is not to implythey are nativist racist bigots.
You listen to people, you don’t la-bel them insultingly.
A tactful response? “We take yourpoint—we haven’t succeeded andwe’ll try to get it right. In the mean-
We Must Improve Our Trustcretly frail and in constantneed of saving.
When you’re young andstarting out you imagine insti-tutions are monoliths—big,impervious to your presence.Later, having spent timewithin, you know how humanand flawed it all is, and howit’s saved each day by the wis-dom and patience—the quietheroism—of a few. Be one ofthe few.
If you’re young it would begood at this point to enteryour profession with a prema-ture sense of the frailty of ev-erything.
Six years ago I was invitedto speak to a small West Pointclass. Polls had come outshowing that the U.S. militarystill retained the trust of thepeople, and this was much onmy mind. I wondered if the ca-dets knew how much was rid-ing on them.
I told them the institution they’reabout to enter was among the laststanding, and one of their great jobswill be to keep it trustworthy.
Naturally maintaining their insti-tution’s moral stature was not themain focus of their minds. So I toldthem a story of a great army of theWest, admired by all, that did some-thing wrong, and then a series ofthings, and by the end, when it cameout, as such things do, it broke thatarmy’s reputation in a way fromwhich it never quite recovered. I wasspeaking of France and the Dreyfusaffair. They had not heard of it.
There should be a course in it.I urged them to conduct them-
selves so that such a thing couldnever happen in the U.S. Army. Idon’t think I left them rushing todownload Émile Zola on their iPads.I do think they were hearing for thefirst time how much America de-pends on them not only for militaryexpertise but to keep up the nationalmorale.
In many ways we’re too nationalin our thinking. Don’t always bethinking up there. Be thinking here,where life takes place. In building
time, since we’re all imperfecthuman beings, please don’t letyour anger turn into some-thing small, biased and nar-row. While you investigateyour heart, we will get towork.”
You lose nothing when youhear and respect criticism. Yougain trust.
Finally, we ask so much ofgovernment, which is not, weknow, the most competent ofinstitutions. When we ask toomuch and multiply its tasks,it’s likely to fail, and when itdoes we become angry—andtrust goes down again.
Our founders were skepticalof concentrated power. Thepower of government, arrayedagainst the individual, couldcrush him. They devisedchecks, balances, enumeratedrights. Those who believe intheir wisdom should speak ofit more persuasively.
To this day many Republicansspeak of what they call “limited gov-ernment.” This is an unfortunate andunpersuasive phrase. Usage changes.To most people “limited” means in-sufficient, not up to the task. “Hehad the heart of a quarterback butwas limited by his small stature.”Americans know they have limitedgovernment. They’ve been to theDMV. What they’d like is a govern-ment that acknowledges its limitsand understands itself as one ofmany players in the democraticdrama—not the central player but apresent and competent one. A realis-tic government, a humble govern-ment, at the very least a more colle-gial one.
President Trump cannot help. In-creasing public trust is not his de-clared mission, and what it wouldtake is not in his toolbox. He tendsin his statements to underminetrust: His own government is em-barked on a deep-state witch-huntconspiracy, his agencies are incom-petent, the press is fake-news liars.
What can be handled by us,should be. We can’t go forward thisway.
CHADCR
OWE
I have been thinking abouttrust. All the polls show andhave for some time what youalready know: America’s trustin its leaders and institutions
has been falling for four decades.Trust in the federal government hasnever been lower. In 1958 Pew Re-search found 73% trusted the gov-ernment to do what is right “al-ways” or “most of the time.” Thatsounds healthy. As of 2017 that num-ber was 18%. That’s not.
Other institutions have suffered,too—the church, the press, the pro-fessions. That’s disturbing becausethose institutions often bolster ournational life in highly personal ways.When government or law turns bad,they provide a place, a platformfrom which to stand, to make a case,to correct.
A problem that has so many partsand so much history—from Vietnamto Twitter bots—will not easily besolved. But there are things we cando individually to help America bemore at peace with itself.
First, realize this isn’t merely aproblem but a crisis. When you sayyou believe in and trust democraticinstitutions, you are saying you be-lieve in and trust democracy itself.When you don’t, you don’t. When anation tells pollsters it’s unable totrust its constituent parts it’s tellingpollsters it doesn’t trust itself.
It’s time to see our mighty insti-tutions with their noble facades—thegrand marble court houses, the soar-ing cathedral—for what they are: se-
American institutions—and therefore democracyitself—are frailerthan we realize.
DECLARATIONSBy Peggy Noonan
PUBLISHED SINCE 1889 BY DOW JONES & COMPANYRupert Murdoch
Executive Chairman, News CorpGerard Baker
Editor in Chief
Robert Thomson
Chief Executive Officer, News CorpWilliam Lewis
Chief Executive Officer and Publisher
EDITORIAL AND CORPORATE HEADQUARTERS:1211 Avenue of the Americas, New York, N.Y., 10036Telephone 1-800-DOWJONES
DOW JONES MANAGEMENT:Mark Musgrave, Chief People Officer;Edward Roussel, Chief Innovation Officer;Anna Sedgley, Chief Operating OfficerOPERATING EXECUTIVES:Ramin Beheshti, Product & Technology;Kenneth Breen, Commercial;Jason P. Conti, General Counsel;Frank Filippo, Print Products & Services;Steve Grycuk, Customer Service;Kristin Heitmann, Chief Commercial Officer;Nancy McNeill, Advertising & Corporate Sales;Christina Van Tassell, Chief Financial Officer;Suzi Watford, Chief Marketing Officer;JonathanWright, InternationalDJ Media Group:Almar Latour, PublisherProfessional Information Business:Christopher Lloyd, Head;Ingrid Verschuren, Deputy Head
Matthew J. Murray Karen Miller Pensiero
Executive Editor Managing Editor
Jason Anders, Chief News Editor; Thorold Barker,
Europe; Elena Cherney, Coverage Planning;Andrew Dowell, Asia; Neal Lipschutz, Standards;MegMarco, Digital Content Strategy;Alex Martin,Writing;Michael W. Miller, Features& Weekend; Shazna Nessa, Visuals;Rajiv Pant, Technology; Ann Podd, NewsProduction;Matthew Rose, Enterprise;Michael Siconolfi, Investigations;Nikki Waller, Live Journalism;StephenWisnefski, Professional News;Carla Zanoni, Audience & Analytics
Paul A. Gigot, Editor of the Editorial Page;Daniel Henninger, Deputy Editor, Editorial Page
WALL STREET JOURNAL MANAGEMENT:Joseph B. Vincent, Operations;Larry L. Hoffman, Production
OPINION
Conversion Therapy Isn’t the Cure for ‘Toxic Masculinity’
I t’s traditional to regard otherpeople’s gender and sexuality aspathological. Mostly male medi-
cal professionals once diagnosed“female problems,” including hyste-ria, fainting spells and chronic irra-tionality. Doctors and psychiatristsconsidered homosexuality an ill-ness, and for decades it was listedas such in the diagnostic manual ofthe American Psychological Associ-ation. Some still try to treat homo-sexuality as a curable condition.Gender nonconformists have beenrelentlessly pathologized, stereo-typed, and even criminalized wher-ever they wandered into publicview.
Yet these traditions are being in-verted. Macho men are now takingwhat we’ve dished out, and “toxicmasculinity” is being blamed forschool shootings, wars, sexual ha-rassment, and even—God forbid—Donald Trump, who is held up as itsvery embodiment. Since people whoregard themselves as masculinehave spent centuries diagnosingother people’s identities, this turn-about might be considered fair play.
There is a certain poetic justicein the reversal. But that doesn’tmake it a sensible, effective or mor-ally decent approach to any partic-ular societal problem. I can onlysay what members of these margin-alized groups have said for years:Get your hands off my . . . gender.
“Too many boys are trapped inthe same suffocating, outdatedmodel of masculinity, where man-hood is measured in strength,where there is no way to be vulner-able without being emasculated,where manliness is about havingpower over others,” the comedianMichael Ian Black lamented in Feb-ruary. “They are trapped, and theydon’t even have the language to
talk about how they feel about be-ing trapped, because the languagethat exists to discuss the full rangeof human emotion is still viewed assensitive and feminine.” Inspired byMr. Black’s essay, two New YorkTimes writers offered conversiontherapy in the form of a lessonplan. It’s supposed to prevent massshootings.
We guys, evidently, find our-selves caged in a world withoutemotion or even language. We areaccounted for as evolutionarythrowbacks. Adapted to huntingmammoths, our services are no lon-ger required in a world of yoga stu-dios, chai lattes and universal love.This too—the gentle hint that menare baboons as much as humans—isquite a traditional way of devaluingvery large groups.
This trend has transcendedthinkpieces and entered real life.The “Boys to Men” program in the
Maine public schools retrains mid-dle- and high-school boys awayfrom pathological machismo. Theprogram begins with a “genderbox” exercise. “The group leaderdraws a big box on the chalkboard,
and the boys brainstorm stereo-types of masculinity. All of those goinside the box. Then they discusswhat happens if a guy tries to be-have in a way that’s not describedin the box,” according to the Guard-ian. “Empathy is the glue that holdstogether all of the ideas in thecourse.” After that, curing mascu-
linity is as easy as thinking outsidethe box.
These interventions use a hyper-general idea about a whole popula-tion—call it a stereotype—as anexplanation for specific phenom-ena. It isn’t much more insightfulthan blaming mass shootings on“society” or “social media.” Sel-dom can anyone explain how mas-culinity specifically affected theshooters or put them in motion.Unless they can make that connec-tion directly, the critics of mascu-linity haven’t explained anything.And I would caution against sheerstereotyping or bigotry as a plausi-ble style of inference. Taking a fewproblematic people and taintingwhole groups as inherently flawed,inferior or pathological—it’s neverended well.
Nor should boys be trained infemininity. There isn’t any reasonto believe it will ameliorate the
problems, and it isn’t anyone’s job.We ought to leave each person’sgender to himself or herself. Thatthe conversion therapy is directedin this case at a “dominant” groupdoes not make the thinking clear,the ethics decent or the treatmenteffective.
No doubt masculinity—like femi-ninity, for that matter—has bad aswell as good effects. But the resultsof trying to box it up are incalcula-ble. Start with the following princi-ple, a hard-won insight from a cen-tury of bad diagnosis of people’ssexual identities as dysfunctions orcrimes: No one is called upon to bethe gender police.
Mr. Sartwell, an associate pro-fessor of philosophy at DickinsonCollege, is author of “Entangle-ments: A System of Philosophy”(State University of New York,2017).
By Crispin Sartwell
Doctors once regardedhomosexuality and ‘femaleproblems’ as diseases.The reverse is no better.
What CBS’s Boardroom Blood Feud Says About TVReferences to theTiffany Networkhave been scarce inthe latest corporatebrawl over controlof CBS. The phraseharks back to atime when networkTV was awfullyimportant.
Network TV isn’twhat it used to be,
but the CBS battle is sufficientlyjuicy to have occupied the New Yorkand L.A. media for the past severalweeks. In one corner is Shari Red-stone, who controls 10% of the stockand 80% of the voting rights inthriving CBS, and wants CBS to ac-quire flailing Viacom, in which shealso owns 80% of the voting rights.
In the other corner is CBS’slong-serving CEO, Leslie Moonves,and a majority of his board. Theyapparently have been chomping toget out from under Ms. Redstone’sspecial powers and now see herconflicted role in the Viacomproposal as a chance to freethemselves.
Our own view is that voting-rights lockups are a mixed bag butpublic investors can choose not tolive under them simply by not buy-ing the stock. To give the standardplug, such lockups allow rulingfamilies to consider the public in-terest rather than Wall Street whenrunning media companies. Even adefender like veteran studio execu-tive Edward Bleier, however, re-cently took to the pages of industrypublication Broadcasting & Cable tochastise Viacom for giving thepractice a bad name.
But the matter is complicated.Mr. Moonves himself has blown hotand cold on a Viacom deal. A re-union (the companies were underthe same roof until 2006) wouldactually fall pretty much in linewith the strategic reaction of otherTV powers to the streaming revolu-tion, which has been to doubledown on traditional TV content.
Comcast is chasing after the ca-ble and studio assets of Fox; AT&Tis buying those of Time Warner. Inboth cases, physical network opera-tors apparently see television as asweetener in the battle for broad-band subscribers. They also seedigital TV as a platform for com-peting with Google and Facebook intargeted advertising.
Even more relevant to CBS andViacom is the Disney example. Dis-ney also seeks the Fox assets be-
cause it says it wants to competedirectly with Netflix in the stream-ing business. Disney even says itwill stop selling shows to Netflixwhen current deals expire.
Believe the first part. Don’t be-lieve the second part. Disney willcertainly launch its own stream-ing apps in a multifaceted strat-egy to lure top dollar for its manyvaluable franchises (e.g., “Star
Wars”). But Netflix is hardlyturning out to be the hit factorythat its own big content produc-tion budget was supposed to makeit. Netflix will remain a buyer ofDisney content. So will Amazon,the broadband companies, Face-book, Google and Apple as theypursue their own ambitions.
Disney is seeking to become astronger version of what it isnow, a premium content purveyorto many customers. If you ownand can create great shows, thiswill certainly be the safest placeto be among the tsunamis thatare breaking. And if it makessense for Disney, why not forCBS-Viacom, which would bringtogether the rights and talentsembodied in the CBS broadcastnetwork, Showtime, MTV, ComedyCentral and the Paramount moviestudio?
One of these tsunamis is thelong-promised broadband assaulton the traditional cable bundle, bytoo many players now to list. The
other is the arrival of 5G wireless.Cable guys once comforted
themselves that after their TVprofits withered, they could stillcount on the fat margins gener-ated by their local broadband mo-nopolies and duopolies. Not anymore. T-Mobile, keen to winWashington backing for its ownproposed merger with fellowwireless operator Sprint, is al-ready promising to roll out a full-blown TV offering over wirelesslater this year that will be avail-able not just on your phone, buton the big screen in your rumpusroom. Hold on tight. How Ameri-cans buy access to the internetand video content is about un-dergo a major shakeup.
CBS’s boardroom uproar ismostly a distraction from thismain event, but it fulfills a de-mand for human drama, withidentifiable characters: the frus-trated heiress waiting to comeinto her glory; the long-servingCEO chafing to be his own man.
As a side note, Amazon is per-haps your best bet to turn theCBS maelstrom into a futuremovie or miniseries. Amazon isbig in video, but video isn’t big toAmazon; other candidates like Foxand Comcast’s NBCUniversal mayfind that the family boardroom is-sues cut a bit too close to home.
In fact, Amazon’s Jeff Bezosstands out in the tech and mediasandboxes as one founder who hasnot endowed himself and his heirswith special voting rights. Anddepending on how things play outat the Tiffany Network, CBS’s Mr.Moonves, who began life as a TVactor, may even be available toplay himself.
Disney has it right:Owning and creating greatcontent is key to survival.
BUSINESSWORLDBy Holman W.Jenkins, Jr.
.
�
A16 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
STANLEY CUP
The Russian Leading a Hockey BoomAlexander Ovechkin has led the Capitals to the Stanley Cup Finals—and has helped spur youth participation in Washington
THE WASHINGTON Capitals mightnot be able to match the Las VegasGolden Knights’ glittery, sword-fighting pregame shows. But theycarry their own kind of magic asthe Stanley Cup Playoffs move toWashington for Saturday night’sGame 3: a Russian star and an armyof 8-year-olds.
Capitals captain AlexanderOvechkin has built one of the bestcareers in NHL history, with theCup the only thing he’s yet toclinch. (The Caps are tied 1-1 withthe expansion Knights.) The 32-year-old left winger from Moscowhas led the league in goals inseven of his 13 seasons, won threeleague MVP awards and scored ago-ahead goal in the Capitals’Game 2 victory in Las Vegas.
He’s also helped spur a hockeyboom in the Washington, D.C.,area. Since the year before Ovech-kin’s first season, which was2005-06, youth hockey participa-tion in D.C., Virginia and Marylandhas jumped 37%, according to USAHockey. That far surpasses the 4%gain for youth hockey nationwide.
“Certainly when the Caps dowell, registration is up,” said JohnRader, president of the NorthernVirginia Hockey Club based in Mt.Vernon, Va. The club has doubledits number of skaters to 600 froma decade ago, Rader said.
Ovechkin ranks among the topfive players in merchandise salesthis season, according to officialNHL e-commerce partner Fanatics,and third for youth merchandise,behind only Pittsburgh legend Sid-ney Crosby and Edmonton wun-derkind Connor McDavid.
“He’s a great leader and a greathockey player,” said 7-year-old Ca-leb Chen by phone from his homein Clarksburg, Md., during a breakfrom watching Game 1. “He skatesreally fast. Almost any time heshoots, he scores.”
Caleb, who wears a No. 8Ovechkin jersey and jumps on thecouch while watching games, hasplayed hockey for the past twoyears. His 9-year-old brother, Dy-lan, has been playing for five. Afriend got their father, Feng Chen,interested in hockey and now he’sa volunteer board member and re-cruiter for the Montgomery YouthHockey Association.
David Carney, MYHA president,said the Capitals’ strong play inrecent years “has a positive influ-ence on our program, both on in-terest and intensity of interest.”
The 6-foot-3 Ovechkin carrieshimself with a rough-edged cha-risma. His playful smile, missing atop-left incisor, suggests kinshipwith first graders. His preseasonassessment of the Caps—“We’re
BY RACHEL BACHMAN
SPORTS
not going to be suck this year”—was made into T-shirts.
Thousands of fans, many ofthem children, lined up outsideKettler Capitals Iceplex in Arling-ton, Va., last Saturday to glimpseCapitals players coming out ofpractice.
“I was in the same position theyare,” Ovechkin said Friday. “WhenI was a little kid I wore my idols’jerseys. When the kids see you andwant to be like you, it’s a very spe-cial moment.”
Girls hockey in the D.C. area
also has surged since Ovechkin’sarrival, more than doubling to2,653 players in 2017-18, accord-ing to USA Hockey. The Washing-ton Pride hockey club in Rock-ville, Md., has four teams and atraining program for youngerplayers, up from the one team itfielded at its 2001 launch, club di-rector Kush Sidhu said. Amongthe club’s alumni is Haley Skar-upa, a gold medalist on the 2018women’s Olympic team who hassaid she idolized Ovechkin whilegrowing up.
Other forces have fueled thetransition of hockey from an exoticto a more mainstream sport in theD.C. area. For one, the Capitals’1997 move from Landover, Md., todowntown Washington made for amore convenient commute for thefamilies that tend to play thepricey sport, Sidhu said.
“It just became easier, more ac-cessible to families that come frommore affluent areas,” he said. “Andthe population’s been growing, andthe economy’s been pretty strong.People started to make hockeytheir primary sport.”
D.C.-area adult participation hasgrown even faster than youthleagues in recent years, nearly tri-pling in size since Ovechkin’s ar-rival, according to USA Hockey.
Yet the youth numbers are stilllarger overall, and more strikingbecause they counter the nation-
wide trend of fewer young peopleplaying sports. In 2017, 37% ofchildren age 6-12 played teamsports on a regular basis, downfrom nearly 45% nine years earlier,according to the Aspen Institute.
A program sponsored by theNHL and NHL Players’ Associationthat gives kids free hockey equip-ment, including skates, for a rela-tively modest fee that varies byclub also has helped spur growth.The Potomac Valley AmateurHockey Association grew by 1,700players age 5-9 just this past sea-son through the program, associa-tion president Linda Jondo said.
The only problem with youthhockey’s growth is that it’s becometough to pick out individual play-ers on the ice, Jondo said. So manyjerseys simply say “Ovechkin.”—Chris Gordon contributed to this
article.
TheOvechkinEffectYouth hockey participation the year beforeAlexanderOvechkin’s first startwith theCapitals and current numbers:
2004-05 2017-18 % CHANGEPotomacValley 18-Under 9,744 13,307 37%Nationwide 18-Under 369,271 382,514 4%Source: USAHockey. ThePotomacValley includesWashingtonD.C.,Maryland andVirginia
Alex Ovechkin tosses a puck to fans before a recent game. Ovechkin ranks amongthe top five players in merchandise sales this season, according to Fanatics.
BILL
WIPPERT/NHLI/GETTY
IMAGES
WeatherShown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
City Hi Lo W Hi Lo W City Hi Lo W Hi Lo WToday Tomorrow Today Tomorrow
City Hi Lo W Hi Lo W
Anchorage 65 49 s 61 47 sAtlanta 89 72 t 88 67 tAustin 100 74 s 98 75 tBaltimore 82 63 t 68 54 rBoise 81 56 s 91 58 pcBoston 75 54 sh 62 50 pcBurlington 76 50 pc 77 52 pcCharlotte 88 68 t 90 64 pcChicago 72 60 pc 73 56 pcCleveland 72 60 pc 79 60 tDallas 100 72 s 91 69 pcDenver 79 51 s 82 55 cDetroit 73 59 s 74 57 tHonolulu 84 75 pc 86 76 shHouston 97 77 s 96 76 tIndianapolis 86 65 pc 78 56 pcKansas City 79 58 t 83 58 sLas Vegas 100 77 s 104 79 sLittle Rock 95 67 t 87 60 pcLos Angeles 80 60 s 81 62 sMiami 88 73 t 89 73 pcMilwaukee 66 55 pc 73 60 pcMinneapolis 68 53 r 74 57 sNashville 92 70 pc 85 60 tNew Orleans 93 78 t 96 76 pcNew York City 84 62 t 70 54 cOklahoma City 92 58 s 85 58 pc
Omaha 79 57 r 83 61 sOrlando 90 73 pc 89 75 pcPhiladelphia 83 62 t 68 53 shPhoenix 105 77 s 108 78 sPittsburgh 78 64 c 77 59 tPortland, Maine 79 50 pc 65 47 pcPortland, Ore. 81 56 pc 71 53 cSacramento 96 61 s 97 62 sSt. Louis 91 66 t 80 62 sSalt Lake City 77 54 s 83 62 sSan Francisco 77 56 s 73 56 sSanta Fe 89 55 s 77 50 tSeattle 74 53 pc 64 49 shSioux Falls 75 50 r 78 55 sWash., D.C. 81 65 t 68 56 r
Amsterdam 67 56 t 69 55 pcAthens 89 69 pc 87 68 sBaghdad 105 79 s 106 80 sBangkok 91 77 t 91 78 pcBeijing 96 71 pc 89 64 pcBerlin 77 63 t 79 63 tBrussels 69 56 t 76 56 pcBuenos Aires 57 39 pc 57 44 sDubai 105 90 s 106 89 sDublin 68 52 t 68 49 pcEdinburgh 67 53 t 64 53 c
Frankfurt 76 60 t 81 60 pcGeneva 78 56 t 77 58 tHavana 87 70 pc 88 72 pcHong Kong 92 81 t 92 83 cIstanbul 78 63 pc 77 63 sJakarta 91 77 pc 92 76 pcJerusalem 75 59 pc 75 60 sJohannesburg 67 40 s 69 39 sLondon 73 56 pc 76 56 pcMadrid 71 57 t 74 54 pcManila 95 79 t 92 80 cMelbourne 59 42 pc 59 42 pcMexico City 82 57 pc 81 54 pcMilan 85 63 pc 86 64 pcMoscow 74 55 pc 76 56 pcMumbai 93 86 s 92 86 cParis 77 57 pc 80 61 pcRio de Janeiro 86 70 pc 76 68 rRiyadh 109 91 s 111 85 sRome 81 61 pc 81 63 sSan Juan 89 76 pc 90 77 sSeoul 82 60 s 85 62 pcShanghai 79 67 pc 80 70 pcSingapore 89 80 pc 88 81 pcSydney 62 58 pc 64 56 rTaipei City 86 76 c 88 77 shTokyo 79 65 s 80 67 sToronto 75 58 pc 70 58 rVancouver 69 54 c 62 50 shWarsaw 82 62 t 83 60 tZurich 77 55 t 80 57 t
Today Tomorrow
U.S. Forecasts
International
City Hi Lo W Hi Lo W
s...sunny; pc... partly cloudy; c...cloudy; sh...showers;t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice
Today Tomorrow
Warm
Cold
Stationary
Showers
Rain
T-storms
Snow
Flurries
Ice
<0
0s
10s
20s
30s
40s
50s
60s
70s
80s
90s
100+
l lAA h
JJ k ill
Little Rock
CharlottehLoL ill
Pi hbb
Y kk
ySaltalt Lake CitCLLlt L
Tampa
h ill
Memphishi
t
yyCity
D ll
Paso
Billings
PPP d
n
l d
A
ewt
PhSan Diego
Los AngeA l
LLV
ttl
i pls./St. PaupMpls.//
. Lou
gChicCh
on D.Cn D Chihh
t
Ch
kk tford
hit
Indianapolis
CleveCl l d
ff l
AA
k
q qAlbb
h
Oklahoma CityOklahoma City
an A t iA
es Moinesoux Falls
Jack h
pPh ddhil d l hih l hCheyenne
anta Fe
C dCp g
Pierre
h d
h
T c
yb nybA
Topeka
CC bb
gA tA
Ft. Worth
p gfi ld
b
T t
p
VV Calgary
d
HonoluluAnchorage
Jacksonville
Little Rock
CharlotteLouisville
Pittsburgh
New York
Salt Lake City
Tampa
Nashville
Memphis
Detroit
KansasCity
Dallas
El Paso
Billings
Portland
Miami
San Francisco
Sacramento
Orlando
Atlanta
New OrleansHouston
PhoenixSan Diego
Los Angeles
LasVegas
Seattle
Boise
Denver
Mpls./St. Paul
St. Louis
Chicago
Washington D.C.
Boston
Charleston
Milwaukee Hartford
Wichita
Indianapolis
Cleveland
Buffalo
Austin
HelenaBismarck
Albuquerque
Omaha
Oklahoma City
San Antonio
Des MoinesSioux Falls
Jackson Birmingham
PhiladelphiaCheyenneReno
Santa Fe
ColoradoSprings
Pierre
Richmond
Raleigh
Tucson
Albany
Topeka
Columbia
Augusta
Ft. Worth
Eugene
Springfield
Mobile
Toronto
Ottawa Montreal
Winnipeg
Vancouver Calgary
Edmonton
80s
70s
70s60s
50s40s30s 100s
100s
90s
90s90s
90s
90s
80s
80s
70s
70s
80s
80s
60s
60s
60s
60s
60s
60s
60s
50s
50s
50s50s
CYCLING
A CLOUD LOOMSOVER THE TOUR
THIS JULY IN PARIS, with crowds liningthe Champs-Elysées and the yellow jerseyon his shoulders, Chris Froome hopes to pullof a feat that only Eddy Merckx, the great-est cyclist of all time, has achieved before:winning a fourth consecutive Grand Tour.
Froome took the Tour de France lastsummer, the Vuelta a Espana last fall, andcompleted the set of cycling’s three-weekstage races last week with his first careerGiro d’Italia victory in Rome last Sunday.But with the 2018 Tour six weeks away,Froome couldn’t help but look ahead.
“I’m already thinking about it,” he said.So is the rest of the cycling world, but for
different reasons.While Froome dreams of joining Merckx
on the sport’s mountaintop after a dominantGiro d’Italia, other riders, officials and orga-nizers are cringing at the prospect. Froomehas had an “adverse analytical finding”—afailed doping control— hanging over himsince last fall. Now, cycling’s least favoritequestion has returned: Which performancescan it believe?
“I know from my side, I’ve done abso-lutely nothing wrong and it’s only a matterof time until that is clear to everybody,”Froome told the BBC. “It’s unfortunate forthe sport and its image, but hopefully we’llget this result as soon as possible.”
The provisions of the anti-doping codemean that Froome can continue competinguntil the proceedings are concluded. Butwhile the process would normally be confi-dential, news of the test leaked in Decem-ber, and created awkwardness whereverFroome shows up.
“If I would be in same situation, I wouldnot be here,” Dutch rider Tom Dumoulinsaid at the start of the Giro d’Italia, threeweeks before finishing second to Froome.
Even the president of the sport’s govern-ing body, the Union Cycliste Internationale’sDavid Lappartient, has said repeatedly thathe doesn’t believe Froome should be racing.“The burden of proof is not on the UCI. It’son the rider. It’s not up to us to prove thathe’s guilty, it’s up to him to prove that he’sinnocent,” he said in an April interview withThe Wall Street Journal.
Lappartient’s problem is that the UCIdoesn’t directly have the authority to sus-pend Froome. That decision is up to an anti-doping court, which has moved through thiscase like it’s riding with two flat tires. Lap-partient hopes that a decision is imminent.But the Tour de France kicks off on July 7and it isn’t clear that this will be resolved.
Froome and Team Sky have done theirbest to shut out the conversation. With theshort turnaround to the Tour, they have al-ready begun preparing for him to line up atthe start in Noirmoutier-en-l’Ile on July 7,awkwardness or not.
BY JOSHUA ROBINSON
Chris Froome in action during the Giro d’Italia.
ATEF
SAFADI/EPA/SHUTTER
STOCK
.
�
THEWALL STREET JOURNAL. * * * * * * Saturday/Sunday, June 2 - 3, 2018 | B1
PHOTO
ILLUSTRA
TIONBY
THEVO
ORH
ES
Stocks GetBoost FromJobs ReportFacebook sets highestclose; worries oneurozone stability ease
cently pumped billions into newstock offerings, wrote Graham,with “excessive emphasis beinglaid on the reported earnings—which might only be temporaryor even deceptive.”
After the crash, companies were
flush with cash and investors beg-gared. Still, leading businesses re-fused to liquidate their stagnant op-erations and wouldn’t pay out cashin extra dividends or by repurchas-ing their stock. This despite the fact
PleaseturntopageB8
THE INTELLIGENT INVESTOR | JASON ZWEIG
tle company’s cash cow, providing 73% of itsoperating income, or $1.4 billion, on about 11%of its $51 billion in total revenue it reported inthe most recent quarter.
Mr. Jassy made $194,447 last year, thesecond most among Amazon’s top officersafter CEO Jeff Bezos, who made $1.7 mil-lion. In 2016, Mr. Jassy received shares thatwere then valued at $35.4 million, in addi-tion to his salary—the most any top Ama-
License to DriveLamborghini’s secretfor great leadership:get out of the way B7
The Deal MakerPeggy Johnson of
Microsoft on her mosttrusted advisers B4
BY JAY GREENE AND LAURA STEVENS
Eighty-sixyears ago this
week, the stock mar-ket hit its worst low.Today, with marketsnear all-time highs,things aren’t as dif-
ferent as you might think.Then, as now, companies and
investors were engaged in a mas-sive power struggle. Then, com-panies were worth far more thaninvestors thought—and would doalmost anything to keep investorsfrom unlocking the hidden value.Today, companies may be worthless than investors think—and areequally intent on preventing in-
vestors from noticing.On June 1, 1932, the great in-
vestment analyst Benjamin Gra-ham published an essay called“Inflated Treasuries and DeflatedStockholders: Are CorporationsMilking Their Owners?”
That day, the predecessor of theS&P 500 index hit its low of 4.40.The Dow Jones Industrial Averageclosed at 44.93. Total trading vol-ume was 1.8 million shares.
Amid the bearish stupor, Grahamdetected something outrageous:Companies were cloaking their trueworth from investors.
In the boom that preceded the1929 crash, investors had compla-
The Fanciful Alphabet SoupCompanies Use to Fool You
A Tale of Two Markets
U.S. stocks losttwo-thirds of theirvalue over the 12months throughJune 1, 1932.
THEWALL STREET JOURNAL.Sources: WSJ Market Data Group; S&P Dow Jones Indices
–80
–60
–40
–20
0
20%
June Aug. Oct. Dec. Feb. April June
One-year index performance
Dow JonesS&P 500
2018
Dow JonesS&P 500
1932
Over the past 12months, the DowJones IndustrialAverage and S&P500 are up morethan 10%.
Note: S&P 500 for 1931-32 represented by Standard Statistics Co.'s 90-Stock Composite.
The Dow Jones Industrial Averagerose more than 200 points Friday torecoup most of its losses for theweek following an upbeat unemploy-ment report that showed a modestgain in wages.
Investors got a dose of good newsabout the U.S. economy after the La-bor Department released its May un-employment report, which showed ahealthy gain in jobs that pushed theunemployment rate to 3.8%, the low-est since April 2000.
The robust jobs report helpedsteady a stock market that had beenstruggling this past week with con-cerns about escalating trade ten-sions and eurozone stability, whicheased after Italy struck a deal on acoalition government.
“It’s encouraging but not scaryfor the markets,” said Luke Tilley,chief economist of WilmingtonTrust, of the 2.7% gain in wagesfrom a year earlier. “The numbers,as they are, leave the [Federal Re-serve] in the place where theywere,” he added of the central bank’splans to proceed with two more in-terest-rate increases this year.
Markets had some early indica-tion that the jobs report would bestrong after President Donald Trumptweeted he was “looking forward” toseeing the figures about an hour be-
fore the Labor Department releasedthe data.
The unusual break from protocolsent yields on the 10-year Treasurynote higher and boosted the dollar.Stock futures were little changed inthe minutes after the tweet and onlystrengthened in the hour betweenthe report’s release and the market’sopening.
Analysts suggested the mutedstock-market reaction was due, inpart, to the fact that Mr. Trump’s in-terests may not necessarily intersectwith investors’, similar to the subjectof trade tariffs—something mostmoney managers say would be detri-mental to stocks.
“For the administration, it mightbe a goal to cause the labor marketto overheat for a short period,” saidSameer Samana, global equity andtechnical strategist with Wells FargoInstitute. “They may view above-po-tential job growth as something thatis positive, especially heading intomidterm elections,” while investorsfear such a jump in wages couldforce the Fed to move more aggres-sively on interest rates.
The Dow industrials added 219.37points, or 0.9%, Friday to 24635.21.The S&P 500 rose 29.35 points, or1.1%, to 2734.62, while the NasdaqComposite added 112.22 points, or1.5%, to 7554.33.
Buoyed by the jobs report, inves-tors bought shares of technologycompanies, a popular trade that hascontributed to much of the nine-yearstock rally’s gains. Tech stocks in theS&P 500 rose nearly 2% on Friday,with Facebook adding $2.21, or 1.2%,to $193.99—its highest close ever.
Still, Friday’s gains weren’tPleaseturntopageB13
BY MICHAEL WURSTHORNAND RIVA GOLD
Investors bought sharesof technology
companies, sending thesector up nearly 2%.
zon executive received that year.A web-services platform such as Amazon’s
lets businesses and other entities rent comput-ing resources at giant server farms, allowingthem to do computing tasks in the so-calledcloud rather than buying their own serversand software. Amazon was early to build sucha platform, and in doing so it upended the in-formation-technology industry, pressuring in-cumbents that sold hardware and software.
Mr. Jassy’s strategy echoes one Amazon em-ployed in retail. There, it built a dominantplatform and became a powerful ally to brandsand vendors of goods sold on its website. ThenAmazon also began selling its own brands andgoods that competed with some of its vendors.
In its cloud services, Mr. Jassy built a plat-form that can weave a multitude of programsin a seamless web of offerings, its own as wellas partners’. And Amazon then began sellingits own services that compete with some.
“On top of everyone’s mind is this black-widow behavior,” said Bill Richter, chief ofQumulo Inc., a Seattle startup that offersdata storage and management on Amazon’ssystem. Amazon doesn’t compete with hiscompany, but every year, he said, “we praythere’s not some big announcement” of anAmazon service that will.
There is growing concern in Washingtonand abroad about the dominance of giant techfirms such as Alphabet Inc.’s Google and Face-book Inc. Amazon, too, has come under attackfrom right and left. President Donald Trump inMarch tweeted that it is “putting many thou-
Pleaseturntothenextpage
� Tech Titans Tiptoe Toward Monopoly ...... B6
As the company relentlesslygobbles up markets in thelucrative cloud business,some partners thrive whileothers fear a giant competitor
HowAmazonWins
It is with a certain dread every autumnthat some companies described by Am-azon.com Inc. as its technology part-ners gather at a Las Vegas conventionand find out if Andy Jassy has new
plans to encroach on their turf.These firms run their software on Ama-
zon’s vast array of servers—part of what isknown as “the cloud”—and from there selluse of their programs to others. Over nearlythree hours, the boss of the Amazon WebServices unit walks the stage, revealing aroad map of brand-new features Amazon it-self plans to offer, a few of which inevitablycompete with partners.
Last November, Emil Eifrem, one of roughly100,000 people watching Mr. Jassy’s keynotein the hall or remotely, braced for what he ex-pected to be one of the announcements, adata-graphing service. Mr. Eifrem’s company,Neo4j Inc., says it defined the technology,which allows customers to analyze data onAmazon’s platform and others. Two years ago,as it researched the market, Amazon visitedNeo4j asking for help building a similar prod-uct, said Mr. Eifrem, Neo4j’s chief executive.Neo4j declined.
Mr. Jassy did announce Amazon’s compet-ing service in Las Vegas and made it widelyavailable this week. “When Amazon launchesin your space, you’re stupid if you don’t getscared by that,” Mr. Eifrem said, “because theydo tend to outcompete everyone.”
Amazon’s web-services business has beenblazingly successful, and a look at how thatcame to be stands as a master class in howAmazon wins—and why now it has become apolitical target. The unit has become the Seat-
EXCHANGEBUSINESS / FINANCE / TECHNOLOGY / MANAGEMENT
DJIA 24635.21 À 219.37 0.9% NASDAQ 7554.33 À 1.5% STOXX600 386.91 À 1.0% 10-YR. TREAS. g 20/32 , yield 2.895% OIL $65.81 g $1.23 GOLD $1,294.80 g $5.30 EURO $1.1659 YEN 109.52
Digging OutIndex performance, past week
THEWALL STREET JOURNAL.Source: WSJ Market Data Group
2
–2
–1
0
1
%
Fri.Wed.Tue. Thu.
Dow JonesIndustrial Average
S&P 500
Nasdaq Composite
.
�
B2 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
WALT DISNEY CO.The debut of Walt Disney’s“Solo: A Star Wars Story”grabbed the top spot at theweekend box office, but in-vestors weren’t getting cocky.Solo’s $84.8 million in North
American ticket sales through Sundaywere the weakest since Disney re-launched the Star Wars franchise in 2015,and the movie also opened at less thanlight speed overseas. The company wasdealt another blow later Tuesday whenits ABC network canceled hit TV show“Roseanne” after a racist tweet from leadactress Roseanne Barr. The move openeda big hole in the network’s prime-timeschedule.
�DIS-2.5%
DICK’S SPORTING GOODS INC.Shares of Dick’s SportingGoods had their best dayever Wednesday, rising 26%after the company reportedits first quarter of resultssince halting sales of as-
sault-style rifles in the aftermath of theschool shooting in Parkland, Fla. As ex-pected, hunting sales fell, but the over-all results were better than many ob-servers had anticipated and thecompany raised projections for the restof the year. Guns are a low-margin busi-ness for retailers, so the decision helpedimprove Dick’s profit margins, and ana-lysts expect the company’s results willcontinue to improve.
�DKS26%
WALMART INC.In an attempt to attract andretain workers in one of thetightest labor markets sinceWorld War II, Walmart an-nounced it would heavilysubsidize the cost of online
college tuition for its U.S. store workerspursuing degrees in business and sup-ply-chain management from threeschools. Walmart, with 1.5 million do-mestic employees, is the largest privateemployer in the U.S.. The company didnot disclose the price tag of the pro-gram, which it will phase in over a year,but said it selected the three nonprofitschools based on their programs foradult students.
�WMT2.1%
SEARS HOLDINGS CORP.Sears shares plummetedThursday after the embattleddiscount retailer announcedplans to close more than 60unprofitable stores. Searshas been closing hundreds of
locations in recent years, selling brandsand spinning off divisions to stay afloatamid mounting losses and the defectionof customers. Investors, suppliers andlandlords have grown increasingly con-cerned about the company’s future. Itsstruggles showed no sign of abating inthe latest quarter, its 26th consecutiveperiod of declining sales, with merchan-dise sales down 34%, same-store salesdown 13% and a net loss of $424 million.
�SHLD-12%
GENERAL MOTORS CO.GM got a leg up in the raceto develop commercial au-tonomous vehicles on Thurs-day after Japan’s SoftBankGroup Corp. unveiled a $2.25billion investment in its driv-
erless-car unit, GM Cruise. GM’s stocksoared 13% as investors heralded thedeal as a potential tide-turner for the110-year-old company that previouslystruggled to match the hype of its Sili-con Valley competitors, electric-carmaker Tesla Inc. and Alphabet Inc.’s self-driving car subsidiary Waymo. GM hasbeen testing autonomous electric carsand plans to launch a driverless ride-hailing service in several cities next year.
�GM13%
FACEBOOK INC.What data-privacy scandal?Shares of Facebook Inc. onFriday hit a new record highfor the first time since Febru-ary’s Cambridge Analyticadata-breach revelations. The
stock rose 1.2% on a day when newsbroke that the social-media giant wasclose to announcing the first crop ofnews shows that will air exclusively onits video platform, Watch, starting in July.Facebook will fully finance the video con-tent, which will likely come from FoxNews and CNN. Separately, the companysaid it was scrapping its trending-topicfeature.
—Laine Higgins
�FB1.2%
JPMORGAN CHASE & CO.U.S. bank stocks went for a wild ride over the pastweek, plummeting Tuesday on fears that Italian politi-cal tumult could spark a crisis in Europe, and dippingagain Thursday amid heightened trade tensions. Butthey recovered some ground Friday after a sunny U.S.
jobs report. JPMorgan was the S&P 500’s worst performerTuesday with a 4.3% dip. By the end of the week, the bank’sstock was trading 2% off last Friday’s close.
�JPM-4.3%
PERFORMANCE OF BIG U.S. BANK STOCKS THIS WEEKSource: WSJ Market Data Group
JPMorgan
WellsFargo
Citigroup
GoldmanSachsMorganStanley
0
–8
–6
–4
–2
%
Tue. Wed. Thu. Fri.
services that customers are askingfor. “You’ll continue to see us addservices as customers tell us theymake sense and they want themfrom us.” He declined this week tocomment further. In a 2016 inter-view, he said: “In every one of thespaces where we have built furtherup the stack, our ecosystem partnerswho’ve built significant offerings ontop of our platform have done justfine. These are gigantic markets.”
Antitrust questionsAmazon’s position raises the
kind of concerns seen years agoover practices of companies suchas Microsoft. That company’s useof its dominance in personal-com-puter operating systems to moveinto others’ turf lay at the centerof the landmark antitrust caseagainst it.
Microsoft and the federal gov-ernment settled in 2001, with Mi-crosoft agreeing to such businessrestrictions as not engaging insome discriminatory practices. Atthe time, Microsoft founder BillGates called the deal “a good com-promise and good settlement.”
Amazon could run afoul of anti-trust law if it tied new services toits cloud-infrastructure offering,making it less likely customerswould use rival products, said Her-bert Hovenkamp, a University ofPennsylvania Law School antitrustprofessor. Moves by Amazon to re-quire customers and partners to useits services, rather than competi-tors’, would also get regulatoryscrutiny, he said.
One difference is Amazon WebServices isn’t as dominant as Micro-soft’s Windows in the late 1990s,when Microsoft held more than a90% share of its market. GoldmanSachs & Co. pegged Amazon’s shareof the so-called public-cloud marketat 42% last year.
Amazon views the market morebroadly, including all corporate techspending in the cloud and in com-panies’ own data centers. By thatmeasure, Amazon’s share “repre-sents a single digit percentage,”said an Amazon spokeswoman. Am-
azon Web Services, she said, “com-petes with the largest and mostsuccessful technology companies inthe world in a market segmentthat’s trillions of dollars in size.”
And Amazon isn’t growing asquickly as Microsoft and Google incloud computing. Microsoft’s reve-nue from the business gained 94%and No. 3 Google’s more than dou-bled in the most recent quarter,while Amazon’s climbed 45%, ac-cording to Goldman Sachs.
Some partners praised what theysaid is Mr. Jassy’s ability to straddlethe line between ally and rival, in-cluding CEO Bob Muglia of Snow-flake Computing Inc., a data-ware-housing service. It competes withan Amazon offering that existedwhen Snowflake began offering iton the platform. Mr. Muglia, speak-ing of his earlier days running Mi-crosoft’s division that worked withdevelopers and corporate custom-ers, said: “Andy has done a betterjob partnering with companies hecompetes with than I did.”
The data weaponOne Amazon weapon is data. In
retail, Amazon gathered consumerdata to learn what sold well, whichhelped it create its own brandedgoods while making tailored salespitches with its familiar “you mayalso like” offer. Data helped Ama-zon know where to start its owndelivery services to cut costs, analternative to using United ParcelService Inc. and FedEx Corp.
“In many ways, Amazon is noth-ing except a data company,” saidJames Thomson, a former Amazonmanager who advises brands thatwork with the company. “And theyuse that data to inform all the de-cisions they make.”
In web services, data across thebroader platform, along with cus-tomer requests, inform the com-pany’s decisions to move into newbusinesses, said former Amazonexecutives.
That gives Amazon a valuablewindow into changes in how cor-porations in the 21st century areusing cloud computing to replacetheir own data centers. Today’scorporations frequently want aone-stop shop for services ratherthan trying to stitch them to-gether. A food-services firm, say,might want to better track data itcollects from its restaurants, so itwould rent computing space fromAmazon and use a data service of-fered by a software company onAmazon’s platform to better ana-lyze what customers order. Asmall business might use an Ama-zon partner’s online services forpassword and sign-on functions,along with other business-man-agement programs.
Amazon said it doesn’t peer intothe sensitive data such as customerrecords, corporate accounts andother data that its business partnersstore on Amazon’s servers.
Amazon engineers are addingfeatures and services at a rapidpace, more than 1,400 last year.“They never let up on the gaspedal,” Mr. Bezos told sharehold-ers Wednesday. “Our customersare loyal to us right up until thesecond a competitor offers a bet-ter service.”
The day before his November2017 keynote, Mr. Jassy previewedhis speech with venture-capitalfirms in a windowless Las Vegasconference room, two attendeessaid. One venture capitalist askedMr. Jassy if he planned to launchservices that could threaten start-
ups that built their businesses onAmazon’s platform. Mr. Jassy re-plied, they said, that any time Ama-zon moved into a market niche,companies already there continuedto succeed because the markets arelarge and growing.
The notion that Amazon’s en-try in a market won’t hurt newrivals “doesn’t quite pass thesmell test,” said one of the at-tendees, a venture capitalist whosaid he worries about the threatto companies in his portfolio.
“A lot of CEOs go into Andy’skeynote saying, ‘God, I hope Ama-zon doesn’t introduce a productthat competes with mine,’ ” saidSnowflake’s Mr. Muglia.
The introductions continue afterLas Vegas. In December, Amazonlaunched Single Sign-On, whichmanages access to Amazon WebServices accounts, a move some be-lieve will put it in competition with
Okta Inc., which offers a way forcustomers to sign on once acrossmultiple services. Okta CEO ToddMcKinnon said his company’s prod-uct lets users sign in across abroader array of companies thanAmazon’s. Still, “we’re paranoid,”he said, “so we’re watching them.”
Inside jobMr. Jassy is a 20-year insider, a
Harvard M.B.A. who led Amazoninto music CDs and did a gig in theearly 2000s shadowing Mr. Bezosas his technical assistant. He hasled Amazon Web Services, knownas AWS, since 2003.
The idea for the service, he said,was discussed at a 2003 brain-storming session in Mr. Bezos’ liv-ing room. Participants began look-ing into how Amazon, which hadbuilt data centers to manage its re-tail operation, could turn that ex-pertise into a business.
Early on, AWS focused on beinga place where companies couldbuild code and store data, and fromwhich they could offer services tofirms wanting to do business tasksin the cloud. The vision was that“any individual in his or her owngarage or dorm room,” Mr. Jassysaid, “could have access to the samecost structure and scalability andinfrastructure as the largest compa-nies in the world.”
“We thought we would have da-tabase services,” he said, “but wedidn’t anticipate building our own.”
AWS appealed to startups,which, with just a credit card,could buy the computing servicesthey needed. Airbnb Inc., Lyft Inc.and Pinterest Inc. are AWS cus-tomers. More-established corpo-rations came along later.
Initially, Amazon built a fewmassive data centers in the U.S.It now has 55 collections of datacenters globally.
Amazon’s partners saw it becom-ing a rival in 2015, when Mr. Jassyintroduced a data-analytics tool,QuickSight, in his keynote. That en-croached on partners such as Tab-leau Software Inc. QuickSight hasgained some traction with smalland midsize businesses, while Tab-leau has had success with largercorporations, said Stifel Nicolausanalyst Tom Roderick. The threatlooms, he said, that Amazon willpluck off those bigger customers.“The fact is that Amazon is the bo-geyman that can come at you inthree to five years.”
Tableau CEO Adam Selipsky, aformer AWS executive and a friendof Mr. Jassy’s, said: “There are tinyareas where the companies are incompetition, but it’s really noise.”
Companies happy with Amazon’sweb services despite competingwith Amazon include Netflix Inc.,whose CEO, Reed Hastings, said Mr.Jassy took a hands-on approach tosecuring his business.
“As Andy would say, we are par-ticularly valuable because we com-peted,” said Mr. Hastings, saying heisn’t concerned about Amazon’smove a few years ago to become arival in video.
Amazon’s decisions to move intoothers’ markets are part of doingbusiness, said Barry Crist, CEO ofChef Software Inc., which makestools to automate developer tasksand has limited competition withAmazon in the business of provi-sioning computing resources.
“As a small company, you’ve gotto be the minnow that swims in andout of the mouth of sharks,” hesaid. “If you get lazy, that mouthmight close on you.”
sands of retailers out of business!”Sen. Bernie Sanders in an AprilFacebook post raised concernsabout Amazon’s “extraordinarypower and influence.”
Mr. Bezos, at Amazon’s annualmeeting Wednesday, answered aquestion about the mounting criti-cism, saying all large institutions“deserve to be inspected and scruti-nized. It’s normal.”
Much of the ire focuses on Am-azon’s retail heft, but the story ofAmazon’s web services helpsshow how far the company isspreading its tentacles, with hugesuccess. Mr. Jassy has turned theworld’s largest online retailerinto a dominant source of corpo-rate technology online.
Amazon is market leader, report-ing $17.5 billion in web-servicessales last year. No. 2 MicrosoftCorp. had $5.3 billion in revenuelast year from its cloud-infrastruc-ture business, estimates investmentfirm Stifel Nicolaus & Co.
The rising concern is over howAmazon’s dominance may give it anadvantage in new businesses. Noneof the Amazon partners The WallStreet Journal spoke with wouldsay publicly that new Amazon com-petition damaged its business. Pri-vately, some said they worry Ama-zon’s encroachment may do damageeventually.
One reason there is angst but novisible pain when Amazon suddenlycompetes is that there is plenty ofbusiness to go around, said TodNielsen, CEO of a cloud-applicationcompany named FinancialForce.comInc. “The total addressable marketis so big. We’re really in the earlydays of the land grab.”
Mr. Jassy said in a November in-terview that Amazon is providing
Continuedfromthepriorpage
HowAmazonWins
Revenue
AWSAmazon
0
10
20
30
40
$50 billion
’15 ’16 ’17 ’182014
Public-cloud market share
AWS has continued to gain globalmarket share, while its main rivalsalso grow.
100%
0
20
40
60
80
2016 ’17 ’18 ’19
Amazon
Microsoft
AlibabaOther
Source: FactSet (income and revenue); Gartner(market); Goldman Sachs (estimate)
Hanna Sender/THEWALL STREET JOURNAL.
PROJECTIONS
Silver LiningAmazon's 'cloud' revenue,through AmazonWeb Services, isstill a small portion of total sales...
Operating income
...and it brings in the bulk ofAmazon's total profit.
...but it isgrowing rapidly...First quarter revenue up49% from previous year
$2.0
0
0.4
0.8
1.2
1.6
billion
’16 ’17 ’182015
KAMILBIALOUSFO
RTH
EWALL
STRE
ETJOURN
AL
Andy Jassybuilt Amazon’sweb-servicesunit into a
dominant force.
THE SCORETHE STORY OF THE BUSINESS WEEK TOLD THROUGH 7 STOCKS
.
�
THEWALL STREET JOURNAL. * * * * * * * * Saturday/Sunday, June 2 - 3, 2018 | B3
and tech support.He pointed to his experience
in helping Google build upglobally.
“No, I haven’t worked in se-curity,” Mr. Arora said in an in-terview. “The need here is tolead a team of 5,000 people,shore up our global operationsto continue to scale.”
Mr. Arora said it was toosoon to get into the specificsof his strategy, but noted thathe was attracted to helpingcompanies figure out how tostay secure as they transitionto cloud computing. “I thinkthat is a huge opportunity,” hesaid.
His tenure at Palo Alto Net-works begins June 6, the com-pany said. Mr. Arora declinedto comment on his compensa-
tion.Mr. Arora said he plans to
focus on continuing the com-pany’s current trajectory. “Thequestion is how do we takethis from here and 2x or 3x itand continue to scale,” he said.
At SoftBank, where heserved as president and oper-ating chief, Mr. Arora shep-herded billions of dollars in ac-quisitions. He had once beenconsidered a successor to theJapanese internet and telecom-munications company’s CEO,Masayoshi Son, who had hand-picked the Silicon Valley dealmaker to replace him. But Mr.Arora faced criticism fromsome SoftBank shareholdersover his investment choices forthe company, and he leftabruptly in 2016—two years
BUSINESSWATCH
REGULATION
Trump Taps RoismanFor SEC Opening
President Donald Trumpplans to nominate a top aideto the Senate Banking Commit-tee chairman for a GOP open-ing on the Securities and Ex-change Commission, the WhiteHouse announced late Friday.
If confirmed, Elad Roisman,the chief counsel to the bank-ing panel led by Mike Crapo(R., Idaho), would succeed Mi-chael Piwowar at the top U.S.
markets regulator. Mr. Piwowarplans to leave the SEC by July.
Mr. Roisman, 37 years old,would join a long list of formerbanking committee stafferswho have filled top slots at thefive-member commission, in-cluding Mr. Piwowar and twoother sitting commissioners:Kara Stein, a Democrat, andHester Peirce, a Republican.
The Wall Street Journal re-ported last week the WhiteHouse was considering nomi-nating Mr. Roisman to thepost.
—Andrew Ackerman
NECCO WAFERS
Candy Maker Is SoldFor $17.3 Million
The Metropoulos family,known for turning around nos-talgic household names such asHostess Brands and Chef Bo-yardee, is buying the maker ofNecco wafers after a sale of thecompany to an Ohio candymaker fell apart.
Round Hill Investments LLC,the firm run by billionaire inves-tor C. Dean Metropoulos and hissons Evan and Daren, has pur-
chased the New England Con-fectionery Co. out of bankruptcyfor $17.3 million.
The sale, which a bankruptcylawyer said closed on Thursday,comes days after a deal withOhio’s Spangler Candy Co., themaker of Dum Dum lollipops,collapsed. Spangler had won achapter 11 auction last week andagreed to pay $18.83 million forthe candy maker. However, courtpapers show, Spangler wantedits purchase price adjusted to re-flect a lower price, causing thesale to collapse.
—Lillian Rizzo
Trending-TopicsFeature Dropped
Facebook Inc. said it wasscrapping its trending-topics fea-ture, two years after the list ofnews stories became a lightningrod for conservatives’ discontentover what they claimed was thecompany’s liberal bias—an accu-sation that still dogs Facebook.
Facebook said the feature,which it intends to remove nextweek, became less useful overtime, and that removing it would
“make way for future news ex-periences” on the platform.
The feature accounted for anaverage of less than 1.5% ofclicks to news publishers fromFacebook, according to the com-pany.
One plan is for Facebook topay some news organizations toproduce daily and weekly newsshows for Watch, the video-fo-cused portion of its platform.The company plans to unveilsome of those news shows asearly as next week, The WallStreet Journal reported.
—Deepa Seetharaman
vehicles to the premium retailmarket.” That effort will likelygrow out of Fiat Chrysler’s ex-panded partnership with for-mer Google car unit WaymoLLC, Mr. Wester said.
He didn’t provide a timelinefor retail sales, but said theplan is to introduce robotic ve-hicles for restricted areas by2023 and fully self-driving ve-hicles under all driving condi-tions after 2025.
In a move to boost annualprofit by as much as $800 mil-lion, Fiat Chrysler said it plansto start offering vehicle financ-ing directly to car buyers. The
company is considering settingup a new business or buyingan existing one, including thatof its current financing part-ner, Santander Consumer USAHoldings Inc. The auto makerhas begun acquisition talkswith the Santander unit, saidChief Financial Officer RichardPalmer.
Santander Consumer said itis in “exploratory discussions”with Fiat Chrysler about its in-terest in the financing business,known as Chrysler Capital.
Fiat Chrysler is the onlymajor auto maker in the U.S.that doesn’t have an in-house
financing unit, which providesan additional revenue streamfrom vehicle sales and a con-tinuing relationship with carbuyers. It has operated with-out a so-called captive financ-ing arm since the Chryslerbrand emerged from bank-ruptcy in 2009.
The auto maker also said itis pursuing an aggressivegrowth agenda globally, led byJeep which will launch threeall-new vehicles, including asubcompact for emerging mar-kets and a reintroduced super-size Grand Wagoneer for theU.S. It will also expand electric
engine options to all Jeeps, in-cluding four fully electricSUVs.
“All models will have arange of electric options” by2022, said Mike Manley, headof the Jeep and Ram brands.
Fiat Chrysler will also addto its truck lineup, unveiling anew premium version of itsmainstay Ram 1500 pickup inthe U.S. and a midsize pickupfor global markets. That ispart of a plan to increase Ramtruck sales by at least 20% to930,000 vehicle sales annuallyby 2022.
The full-size Ram Rebel TRXwill take on Ford Motor Co.’sF-150 Raptor, one of the mostexpensive pickups sold in theU.S. Fiat Chrysler also willlaunch a smaller truck to besold under both the Fiat andRam brands.
That will mark a return to asegment it abandoned in theU.S. in 2011 when Fiat Chryslerended production of its DodgeDakota midsize pickup. Themove comes as Ford preparesto reintroduce its Ranger mid-size pickup next year and afterGeneral Motors Co. success-fully rebooted its midsizetrucks with the Chevy Colo-rado and GMC Canyon.
BUSINESS NEWS
BALOCCO, Italy—FiatChrysler Automobiles NV onFriday presented a five-yearvision for the company thatembraces the two biggesttrends in the industry—meet-ing demand for SUVs andtrucks and investing in futuretechnologies such as electric-powered and self-driving cars.
If its plan pans out, the automaker expects to double oper-ating profit to €16 billion($18.71 billion) by 2022 and hitdouble-digit profit margins,compared with 6.8% today.
Chief Executive Sergio Mar-chionne said the company willinvest €9 billion to developand deploy electric engines asit expands its lineup of elec-tric-powered vehicles, part of a€45 billion spending plan overthe next five years focused onfour core brands: Jeep SUVs,Ram pickups and Alfa Romeoand Maserati luxury cars.
“This plan will provide theportfolio of products alignedwith our brands that will en-sure our ability to comply ineach region” with stricteremissions and fuel-economystandards, Mr. Marchionnetold financial analysts and me-dia gathered at a company testtrack outside of Milan.
In the U.S., the company isexpanding its bet on biggerSUVs and trucks, reflectingconsumer demand and a less-strict approach to fuel econ-omy standards in Washington.Mr. Marchionne chided hispeers for appearing to backaway from what he said was aunified industry request toPresident Donald Trump toease fuel economy regulations.“That kind of wavering withthe White House is not help-ful,” he said.
To meet increasingly strictemissions rules in Europe, FiatChrysler said it would phaseout diesel vehicles there by2021 and end sales of somemass-market Fiat cars, such asthe Punto model, that aren’tprofitable enough to recoup thecost of electrification, he said.
Fiat Chrysler’s chief tech-nology officer, Harald Wester,said the company also plans tobe among the first auto mak-ers to offer “fully autonomous
BY CHESTER DAWSON
Fiat Chrysler Bets on Trucks, Tech
Sanofi had vowed to keepannual list-price increases inthe U.S. at or below the federalgovernment’s projections ofyearly health-care spendinggrowth. The company tweakedthat pledge on its website lastmonth, aiming to limit in-creases to that estimated infla-tion rate and promising to ex-plain the rationale for anyincreases above it.
Sanofi has faced criticismfrom health insurers over theprice increases for some of itsproducts like Lantus insulin,though much of the increaseswent to such middlemen asdrug-benefit managers.
The Paris-based companywas also criticized for origi-nally listing Praluent, a newkind of cholesterol drug soldwith Regeneron Pharmaceuti-cals Inc., at $14,600 a year. Ear-lier this year, the companiessaid they would offer discountsbringing the annual price downto as low as $4,500.
In 2017, Sanofi says it raisedthe average list prices of itsmedicines by 1.6%. The year be-fore, Sanofi upped the listprices of its drugs by 4% butnet prices fell 2.1%. Sanofi’snet-price decline last year re-flected its efforts to rebate itsdrugs so that patients wouldhave lower co-pays, a companyspokeswoman said.
French drug companySanofi SA says the averageprice of its medicines fell 8.4%in the U.S. last year after ac-counting for rebates, the latestexample of pharmaceuticalpricing pressures.
Several major drug compa-nies have now said the netprices of their medicines—thatis, the price of the drugs afterdiscounts and rebates—fell inaggregate in 2017. Johnson &Johnson and Merck & Co. havesaid the sums paid for theirdrugs dropped last year, too.
Eli Lilly & Co. said the aver-age prices paid for its medi-cines rose 6% last year afterdiscounts and rebates, whichthe company said had in-creased to 51% of the list price.
Such disclosures are aimedat deflecting criticism of drugprices, showing that the com-panies aren’t price-gouging orresponsible for the rising co-pays and other out-of-pocketcosts many patients are copingwith.
Overall, the list prices ofmany drug continue to rise.
Public attention to the highcost of drugs has promptedpharmaceutical companies likeAllergan PLC to pledge to limittheir annual list-price increasesto less than 10%.
BY JONATHAN D. ROCKOFF
Sanofi Sees PriceFor Its Drugs Fallafter he was wooed away from
Google.Mr. Arora at the time de-
fended his investment recordand said he would remain anadviser to SoftBank as hethought over his next move.
Palo Alto Networks sellsnext-generation firewalls, secu-rity products designed to keepmalicious software out of cor-porate networks. When it wentpublic in 2012, annual revenuewas $225.1 million. By fiscal2017, that figure had jumped to$1.8 billion as the company si-phoned sales from establishedvendors such as Cisco SystemsInc. and Check Point SoftwareTechnologies Ltd.
However, Palo Alto Net-works has consistently run at aloss, in part because of thecost of share-based compensa-tion. Its loss widened to $216.6million in fiscal 2017 from$192.7 million a year earlier.
The change at the topcomes as Palo Alto Networks islooking to acquisitions tomaintain its breakneck revenuegrowth. In March, the SantaClara, Calif., company spent$300 million on cloud-securitycompany Evident.io. The fol-lowing month, it bought Israelicybersecurity startup SecdoLtd. Terms of that deal weren’tdisclosed.
When Palo Alto Networkswent public, the shares pricedat $42. The stock finished Fri-day up slightly at $209.19. Forthe year, it has surged 44%.
Palo Alto Networks Inc. onFriday named Nikesh Arora, aformer top SoftBank GroupCorp. executive, as its nextchairman and chief executive,following years of rapidgrowth for the cybersecuritycompany.
Mr. Arora will succeed MarkMcLaughlin, who joined PaloAlto Networks as CEO in 2011and took the company public in2012. He oversaw brisk growthat a time when high-profile cy-berattacks pushed corporationsto beef up their investments insecurity software.
In an interview, Mr.McLaughlin said that afternearly a decade of runningpublicly traded companies, hewants to spend more time withhis family. He said he dis-cussed the transition with theboard for eight months. He willremain as vice chairman, a“customer-facing” role inwhich he said he will help withcustomer advocacy and thecompany’s relationship withthe federal government.
With Mr. Arora, who alsowill replace Mr. McLaughlin aschairman, Palo Alto Networksgains a CEO with a reputationas a global deal maker.
Mr. Arora was a longtimeexecutive at Alphabet Inc.’sGoogle, where as chief busi-ness officer he oversaw sales,customer service, marketing
BY ROBERT MCMILLANAND ROLFE WINKLER
Cybersecurity Firm Picks New CEO
Nikesh Arora is taking the helm at Palo Alto Networks.
DAVID
PAULMORR
IS/BLOOMBE
RGNEW
S
Besides promoting electric-car and self-driving technologies, the company envisions its Jeep brand fueling strong growth globally.
DANIELACKER
/BLOOMBE
RGNEW
S
Note: Percentage change is from May 2017 Source: the companies THEWALL STREET JOURNAL
Monthly Vehicle Sales Over the Past Year
s0.5% t1.3% s11% s3.1% t4.1%
241,527 215,321 214,294 153,069 131,832MayFord Toyota FCA Honda Nissan
SUVs, PickupsContinue to DriveU.S. Auto Sales
U.S. auto sales rose inMay as demand for sport-utility vehicles and pickuptrucks continued to buoy re-sults despite rising gasprices.
The seasonally adjustedannual rate for industrywidesales rose to 16.91 million ve-hicles from 16.79 million inMay 2017, according to Auto-Data Corp.
May is often the biggestmonth of the year for autosales, with Memorial Daysales driving car shoppers todealerships to kick off thesummer selling season.
SUVs and pickups ac-counted for about two-thirdsof last month’s sales, accord-ing to J.D. Power, the highestlevel ever for May.
That mix benefited automakers like Ford Motor Co.and Fiat Chrysler Automo-biles NV, whose lineups skewheavily toward those vehicles,but hurt auto makers likeToyota Motor Corp. and Nis-san Motor Co. which are longknown for their strength insedans.
Ford’s U.S. sales chief,Mark LaNeve, said that whilethe shift toward SUVs andpickup trucks has been hap-pening for years, “the moveis accelerating.”
At Ford, an 11% increasein sales of the company’s F-Series trucks drove a slightincrease overall. Fiat Chryslerreported an 11% rise on con-tinued strength for its Jeep-brand vehicles. General Mo-tors Co. no longer reportsmonthly sales, moving to dis-close the numbers on a quar-terly basis.
Among Japanese carmakers, Toyota and Nissanposted small declines whileHonda Motor Co. notched amodest gain.
The richer mix of SUVsand pickups—which carryhigher prices than passengercars—drove the averagetransaction price up nearly$1,200 in May compared withlast year, while discounts re-mained flat at about $3,665per vehicle, J.D. Power said.
—Adrienne Roberts
.
�
B4 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
JOHN D. STOLL
FULL DISCLOSURE
the Northeast, Midwest and upperGreat Plains. The spree culminatedwith a $1.1 billion deal to buy 142stores from what was then calledSaks Inc. under banners that in-cluded Carson Pirie Scott, Youn-kers and Herberger’s.
The transaction closed in 2006,leaving Bon-Ton cash-strappedheading into the recession.
Coming out of the downturn,bigger chains such as Kohl’s Corp.and Macy’s Inc. stepped up spend-ing to keep up with rising onlinecompetition by improving theirwebsites and rolling out new pro-grams that let customers pick uponline purchases at local stores.But Bon-Ton was hamstrung.
“They weren’t able to invest,because their cash was going topay down debt,” says Monica Ag-garwal, a managing director ofFitch Ratings.
Mr. Grumbacher defends his de-cision to leverage the company,saying that to survive it had togrow. Even though he admits thedebt hampered Bon-Ton’s abilityto invest in its future, he is frus-trated that subsequent CEOs didn’tdo more to reinvent the business.
“It would have taken an imagi-nation that wasn’t there,” he says.
Some directors, former execu-tives and suppliers agree thatmanagement wasn’t innovativeenough, while acknowledging thatexecutives were limited by havingto siphon off large chunks of thecompany’s cash flow for interestpayments.
“In hindsight, we took on moredebt than was reasonable had weknown what we were going to befacing going forward,” says Mi-chael Gleim, Bon-Ton’s formerchief operating officer and a long-time director.
“I don’t know where to shopnow,” says Barb Blakely, a 55-year-old food-service sales representa-tive at a Bon-Ton liquidation saleon a recent afternoon.
Mr. Grumbacher says he hascome to terms with the company’sfate.“Maybe I didn’t pay enoughattention to the changes thatshould have been made,” he says.
We’ve nowspent well over amonth with Star-bucks Corp. in thecorporate penaltybox. It should betime to make room
for the next company’s encoun-ter with a hot-button issue.
But Starbucks Chairman How-ard Schultz has taken an unusualstep, encouraging the public toresist the temptation to leave hiscompany’s troubles behind.
On Tuesday—more than sixweeks after the arrest of twoblack patrons who tried to usethe restroom without buyinganything at a Starbucks in Phila-delphia—the company closed itsstores nationwide for an after-noon of antibias training. In in-terviews and a letter to custom-ers, Mr. Schultz has indicatedthat subtle forms of racism are asystemic problem the companywill need time to address.
In the middle of this saga, thecompany briefly caused a newcontroversy, when it announcedthat its bathrooms would beopen to all. After some custom-ers and staff balked at the pros-pect, Starbucks clarified it didn’tmean the bathrooms could beused for sleeping or drug use.
Companies are in a new worldwhere crises blow up and spreadglobally instantly, so they have torespond instantly. That meanscompanies can often end up cre-ating a new controversy, upset-ting another constituency withtheir response—think of DeltaAir Lines suspending its dis-counts for NRA members in thewake of the Parkland, Fla., shoot-ing, only to spark a backlash.
That same rapid cycle canwork in companies’ favor, how-ever; it often means controversyblows over faster than ever.
Boycotts devised to punishcorporate misdeeds rarely re-sult in a drag on revenue, andpressure virtually always evap-orates over time, says BraydenKing, a management professorat Northwestern University’sKellogg School.
“One has to wonder if the ef-fect of activism targeting compa-nies is becoming diluted, in thesense that we can’t pay attentionto any single controversy forvery long,” he says.
To date, Starbucks indicates ithasn’t suffered a blow to itsbusiness as a result of the inci-dent, although its share pricehas seen a modest slump. Execu-tives recently said traffic re-mained strong at stores after theApril arrests.
Mr. Schultz’s work is hardlydone. Turning thousands of ca-fes into more inviting places willtest his ability to please a finickypublic and profit-minded share-holders at the same time.
One significant hurdle: how todeal with his licensing operation.Thousands of Starbucks stores inthe U.S. are run by independentoperators, which pay a licensingfee and a cut of annual revenueto Starbucks. Although some-times indistinguishable from the8,000 company-owned stores,the licensee stores offer higheroperating margins because theoperators shoulder much of theoverhead, according to Star-bucks’s annual report.
Chasing these profits meansrelinquishing complete controlover a company’s culture. Thecompany’s 5,700 licensees didn’tclose for bias training Tuesday,though managers have been in-vited to attend diversity trainingsessions and have a relatedguide to use in daily huddleswith employees.
Rather than waiting for thestorm to pass, Mr. Schultz hasbet on a big overhaul. But forStarbucks to thoroughly tacklebias issues, it will need the at-tention of a broad constituency.
Almost on cue, just as Tues-day’s training was gettingstarted, attention moved to afresher example of corporate cri-sis management. Following aracist tweet by comedian Rose-anne Barr, her hit televisionshow was canceled by Walt Dis-ney Co.’s ABC.
StarbucksSlow-RoastsIts Scandal
Boycotts devised topunish corporate
misdeeds rarely resultin a drag on revenue.
Microsoft’s chief deal maker says she largely relies on her gutwhen making big decisions but then “validates her intuition” bychecking in with valued former colleagues, mentors and, firstand foremost, her husband, Eric Johnson, an independentinvestor. Here, four of her other trusted advisers.
Peggy JohnsonExecutive Vice President of Business Development, Microsoft
PERSONAL BOARD OF DIRECTORS
Bon-Ton Stores is closing all its locations, including this one in York, Pa., where it all began in 1898. Below, Tim Grumbacher, the founder’s grandson.
RYANCO
LLER
DFO
RTH
EWALL
STRE
ETJOURN
AL(2)
MICRO
SOFT
STRATEGY
BY Suzanne Kapner
The scion of the doomed Bon-Ton empireoffers struggling department stores his prescription for survival
ARetail Magnate’s
Reckoning
Ascion of one of the lastAmerican department-store dynasties has arecipe for other ailingchains: stop being a de-partment store.
That realization came too latefor Tim Grumbacher to save hisown company, Bon-Ton Stores Inc.,which is liquidating all of its 262locations after filing for bank-ruptcy protection in February.
“If I had had the foresight to re-alize I had to blow up the model, Iwould have,” the former CEO saysin an interview at his spaciouscondominium in York, Pa., the citywhere his grandfather opened asmall dry-goods store in 1898.
Mr. Grumbacher, the largestshareholder, who stepped down asCEO in 2004 but remained chair-man until last year, says he wouldhave subleased space to othercompanies, added more serviceslike blow-dry bars and narrowedthe product assortment. He saysconsumers don’t want to shop incavernous department stores any-more. “You almost have to be a se-ries of specialty stores that peoplecan get into and out of muchfaster,” says the 78-year-old, whois trim from years of Ironmancompetitions.
One obstacle that prevented thecompany from making any bigchanges was a roughly $1 billiondebt load, accrued through multi-ple acquisitions that created a rift
between Mr. Grumbacher and hisfather, who ran Bon-Ton for morethan four decades.
When the first U.S. departmentstores opened in the late 1800s,they were amusement parks forthe upwardly mobile. The big em-poriums showcased everythingfrom corsets to cookware, and in-cluded novelties like escalators.
Shoppers lingered: The averagedepartment-store visit lasted twohours during the late 19th century,says Paco Underhill, chief execu-tive of Envirosell Inc., a researchand consulting firm. Today, visitsby time-pressed shoppers averageless than 45 minutes.
By 1912, the one-room store-front Max Grumbacher named theBon-Ton, French for fashionable,had relocated and morphed into a37,000-square-foot store with 27departments. After Max suffered astroke in 1923, his son Max Sam-uel, known as Tom, abandonedplans to attend Dartmouth Collegeand joined the business. Duringthe post-World War II boom, it ex-panded it into smaller markets.
Tim Grumbacher, Tom’s son,started working for the companyin 1961, after graduating fromDartmouth. Employees set him upwith his first wife, who worked inBon-Ton’s credit office. They weremarried for 46 years, until shedied in 2013. His second wife, whoworked in Bon-Ton’s small-appli-ance department in the 1970s, be-
fore the two met, replaced herhusband as chairman when he re-tired.
Because of his Depression-eraexperience, Mr. Grumbacher’s fa-ther had an aversion to debt. Butby the early 1980s, retailing wasgoing through a period of consoli-dation and to survive chains hadto get bigger—fast.
Bon-Ton, then just a 20-unitchain, waded into the field with its1987 acquisition of 13 stores fromAllied. “When I told [my dad] Iwas going to borrow $100 million,that was more than he could han-dle,” Mr. Grumbacher says. His fa-ther retired from the company andthe two didn’t speak for two years.
Bon-Ton went public in 1991 andmore debt-driven acquisitions fol-lowed, taking the company into
NavrinaSinghPrincipal productlead, Microsoft AI
At Qualcomm,where Ms. John-son worked fornearly 25 years,she gained in-sight from an in-formal group ofwomen at thecompany knownas “Sweetfest,” sonamed becausesweets wereserved at theirgatherings. Ms.Singh, anothercore member,later joined Ms.Johnson at Micro-soft.
Mary DillonChief executive,Ulta Beauty
“She reminds meof one of my sis-ters,” Ms. John-son says of Ms.Dillon, noting thatthey come fromsimilar Irish-Cath-olic families andboth have a back-ground in wire-less-technologybusinesses. Sheconsulted Ms. Dil-lon when weigh-ing her decisionto move to Micro-soft in 2014.
Greg MaffeiPresident and CEO,Liberty Media
Mr. Maffei helpedguide Ms. John-son to her firstseat on a boardof directors, atLive Nation,where he is chair-man. “Greg em-phasized that itwas as importantfor the board tobe a good fit forme and my goalsas it was for meto fit the board’sneeds,” Ms. John-son recalls. Shejoined in 2013.
SherryLansingFormer chairmanand CEO, Para-mount Pictures
Ms. Lansing alsohelped Ms. John-son navigate theprocess of joininga corporate board,advising her onwhat questions toask. In addition toLive Nation, Ms.Johnson sits onthe boards of thePaley Center forMedia and thenonprofit organi-zation PATH; inMarch she wasnamed to a seaton BlackRock’sboard.
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | B5
Mr. Walsh’s move may not makesense for everyone. Here’s what toconsider for your analysis.
The key changesFor many people, two revisions
to non-mortgage provisions willhave the biggest effects on theirmortgage-interest deductions.
One is the near-doubling of the“standard deduction” to $12,000for most single filers and $24,000for most married couples. As a re-sult, millions of filers will no longerbenefit from breaking out mortgageinterest and other deductions onSchedule A.
The other key change is the capon deducting more than $10,000 ofstate and local income or sales andproperty taxes, known as SALT.This limit is per tax return, not perperson.
These changes will hit manymarried couples with mortgagesharder than singles. Here’s why:For 2017, a couple needed write-offs greater than $12,700 to benefitfrom listing deductions on ScheduleA. Now these write-offs have to ex-ceed $24,000.
Assuming a couple has maximumSALT deductions of $10,000, they’llneed more than $14,000 in otherwrite-offs of mortgage interest,charity donations, and the like tobenefit from using Schedule A.
Many couples won’t make it overthis new hurdle on mortgage inter-est and SALT alone. According tothe Mortgage Bankers Association,the first-year interest on a 30-yearmortgage of $320,000 (the average)at the current rate of 4.8% is about$15,250. Interest payments aresmaller if the loan is older or theinterest rate is lower.
The new threshold is lower forsingle filers, as each can also de-duct SALT up to $10,000. Their
pansion of the standard deductionmeans the value of this write-offwill typically be lower than in thepast.
Other limitsFollowing the tax overhaul, most
home buyers can deduct only theinterest on total mortgage debt upto $750,000 for up to two homes.This limit won’t be an issue formost buyers, but some will be af-fected.
There’s a “grandfather” excep-tion: Most homeowners with exist-ing debt up to $1 million on up totwo homes before the tax overhaulcan continue to deduct their inter-est.
The rules also changed forhome-equity loans. To get an inter-est deduction, the taxpayer mustuse the debt to buy, build or im-prove a home. There’s no write-offif it’s used for another purpose,such as paying tuition.
Doing the mathFor homeowners with a shrinking
or vanishing interest deduction,here’s the key question: Is the after-
tax return on an ultra-low-risk in-vestment lower than your after-taxmortgage rate? If it is, consider pay-ing down the mortgage if you can.
Mr. Roth offers this example. SayBob has a mortgage rate of 3.7%,and he’ll no longer get an interestdeduction. He’ll need to earn about3.7% after-tax on an investmentsuch as a five-year certificate of de-posit to come out ahead by keepinghis mortgage. Recently some ofthese CDs had pretax yields ofabout 2.8%.
Preserving liquidityEven if paying down a mortgage
makes financial sense, it means re-stricting access to funds. So con-sider whether they’ll be needed inan emergency, and what the rate ona (non-deductible) personal loanwould be. You need to be able tosleep at night.
Saving the differenceIf you pay off a mortgage, Mr.
Roth advises setting up an auto-matic payment of the savings to aninvestment account to rebuild yourliquidity.
TAX REPORT | LAURA SAUNDERS
Now is the timeto find out if youare one of the mil-lions of Americanswho won’t be ableto deduct theirmonthly mortgage-
interest payments.For 2017, 32 million tax filers got
a mortgage-interest deduction. For2018, that number will drop to 14million. Americans’ total savingsfrom this break are also expected tofall sharply this year, from nearly$60 billion for 2017 to $25 billionfor 2018, according to Congress’sJoint Committee on Taxation.
These landmark shifts are theresult of the tax overhaul’s directand indirect changes to the long-standing provision allowing filersto deduct home-mortgage intereston Schedule A. The changes are setto expire at the end of 2025.
As a result, current and futuremortgage holders need to con-sider their options, which rangefrom paying part or all of debt tositting tight.
“The changes to the mortgagededuction strengthen the argu-ments for paying down or off amortgage,” says Allan Roth, a fi-nancial planner with Wealth Logic.
Some homeowners are alreadyreducing their debt. Ken Walsh, anengineer who lives outside Balti-more with his family, says he useda windfall to pay off the remaining$500,000 mortgage on his home inJanuary.
When tax overhaul passed, Mr.Walsh knew that he and his wifewould no longer get an interestdeduction, even after their 2.6%adjustable-rate loan reset higherthis year.
“It was a perfect storm, so wedecided to pay off the loan,” hesays.
WEEKEND INVESTOR
Should You Pay OffYour Mortgage?
The new tax law changes the math for millions ofAmericans, especially married couples
Returns claiming deduction
13.8 million
2018
32.3 millionreturns
2017
HomewreckerThe tax overhaul's changes to themortgage-interest deduction limit its use.
THEWALL STREET JOURNAL.Source: Joint Committee on Taxation
Tax savings
$59.9 billion
$25.0 billion
standard deduction is now$12,000, so many will only needmore than $2,000 of mortgage in-terest, charity donations and thelike to benefit from listing themon Schedule A.
Even for taxpayers who can stilldeduct mortgage interest, the ex-
HARR
YCA
MPB
ELL
Goodnight, normal trading hours.Say hello to 24-hour trading, five days a week. TD Ameritrade is the first retail brokerage to offer
around-the-clock trading on select securities. The future of trading has arrived.
Get up to $600 when you open and fund an account.
Extended hours trading is subject to unique rules and risks, including lower liquidity and higher volatility. Extended hours trading not available on market holidays.See tdameritrade.com/600offer for offer details and restrictions. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business.TD Ameritrade, Inc., member FINRA/SIPC. © 2018 TD Ameritrade.
Visit tdameritrade.com/trade24-5 to learn more.
.
�
B6 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
is a monopoly unless it harms thepublic or hampers innovation. Buton those counts, many argue we’reclose. Take the way both Googleand Facebook dominate the har-vesting of user data, or Facebook’sethically dubious decision to re-lease vast quantities of personal in-formation to developers.
The reason your electricitycomes from a regulated monopolyis that building a grid is expensive,but pushing more electrons to newcustomers is not. One condition forjudging monopolies is how difficultit is for upstarts to challenge them.
Together, Google and Facebooktake in 73% of U.S. digital advertis-ing. It may not be something youthink about often, but that successrests largely on the fact that bothhave spent so much money buildingdata centers and filling them withhardware and software designed byan elite, in-demand set of engi-neers. In this way they resemblethe telegraph giants, with invest-ments in physical infrastructure solarge no upstart could match them.
They also benefit from some-thing historically unprecedented:the ability to get users to subsidizethem with enormous quantities offree labor. Their systems are fueledby personal information, but in-stead of them hunting for it, peoplewillingly provide it.
In addition, social media is aland grab, and Facebook is its mostsuccessful grabber, says Glen Weyl,a senior research scholar at YaleUniversity and a principal re-searcher at Microsoft Research, thecompany’s R&D lab. In basic func-tion, it’s hardly changed in a de-cade, yet it’s made enough moneyto buy (Instagram, WhatsApp) orcopy (Twitter and Snapchat) itsbiggest competitors.
There is preliminary evidencethat the size of the digital advertis-ing pie could grow faster thanGoogle’s and Facebook’s share of it.Research company eMarketer pro-jected in March that their combinedshare of the ad market will fall forthe first time ever.
“We face fierce competition asnew technologies change the waypeople connect,” says a Facebookspokeswoman. “Facebook is just onepart of an ecosystem that includesdozens of messaging products,photo and video sharing apps, andmany other services. Popularitydoes not equal dominance, and sizeis not a guarantee of future suc-cess.”
Amazon illustrates what monop-olies look like in their early days,says Kim Wang, an assistant profes-sor of strategy and internationalbusiness at Suffolk University’sSawyer Business School. Amazon
seems determined to translate itsdominance in cloud computing andonline retail into dominance inphysical retail, delivery of goods,voice-based computing and a half-dozen other industries.
Amazon already accounts for44% of U.S. e-commerce sales, andis showing rapid growth in catego-ries where it previously foundered,like luxury goods and food. It’s con-vinced former competitors to geton board as partners, is verticallyintegrating everything from order-ing to delivery—and could somedayadd manufacturing to the mix.
If Amazon’s rapid growth contin-ues across all these lines of busi-ness, it’s hard to imagine it noteventually becoming a target forbreakup. Jeff Wilke, Amazon’s chiefof world-wide consumer business,has said that in all the businesses itis in, Amazon has “incredible com-petition.”
“In world-wide retail, we’re lessthan 1%,” he recently told the Jour-nal. “I don’t think any one of theseareas is a football game wherethere’s only one winner.”
While Apple may be hooveringup the lion’s share of the mobile in-dustry’s profits, the company ishardly a monopoly by measure ofoverall market share, say experts.
A “network effect” is when aproduct becomes more useful as
TECHNOLOGY
The bright red, driverless tractor drags thetiller in a perfect line in a south Indian field,makes a turn at the edge of the property,encounters a test dummy and thenstalls, not knowing what to do.
India’s Mahindra & Mahindra, oneof the biggest suppliers of smallertractors to the U.S., and other manu-facturers are racing to develop whatthey see as the future of farming:robo-tractors and other farming equip-ment to help produce more food, more
sustainably at a lower cost.John Deere has tractors and combines, at
left, on the market that free the driver in thecabin from the actual driving so he or she canmonitor the crops and adjust pesticide, waterand soil levels. Technology from Agco Corp.’sFendt lets several driverless tractors follow alead tractor driven by a human.The next generation is tractors that can
drive entirely by themselves. After that: onesthat can plant, fertilize and spray pesticides.London-based CNH Industrial is testing a trac-tor that has no driver’s cabin, with planting andharvesting monitored remotely.But there are plenty of obstacles.The global positioning systems and sensors
to steer around hindrances or read differentkinds of soil and slopes need improvement.And the industry expects pushback from
people whose livelihood could be threatened. InERICHSCHRO
EDER
FORTH
EWALL
STRE
ETJOURN
AL(2)
Now Cropping Up:Robo-Farming
India, for instance, hundreds of millions of farm-ers make up the largest voter group. “We havedecided it has to be a gradual process of mi-grating the farmers,” said Aravind Bharadwaj,chief technology officer for farm equipment atMahindra.Still, there is a lucrative opportunity to re-
tool an industry. A Goldman Sachs report putpotential demand for driverless tractors andother equipment in the next five years at $45billion.Agricultural giants and startups say they are
piggybacking on driverless-car research to revo-lutionize farming. For example, John Deere’sGPS-guided tractors can ensure no part of a
field is plantedor sprayedtwice. Using bigdata and artifi-cial intelligence,Deere expectsto eventuallyhave tractors
that can deliver a different amount of fertilizer,pesticide or water for each plant based on need.“The more we can automate with comput-
ers, with data science and laserlike actions,[the more it] will help save the farmer a ton ofmoney and make production more sustain-able,” said John Stone, senior vice president incharge of development at Deere & Co.
—Vibhuti Agarwal
Tech’s Titans Tiptoe Toward
MonopolyWill Facebook, Google and Amazon be regulated or broken up like
Standard Oil and AT&T? It depends on how they grow.
KEYWORDS | CHRISTOPHER MIMSImagine a not-too-distant future inwhich trustbustersforce Facebook to selloff Instagram andWhatsApp. Imagine atime when Amazon’s
cloud and delivery services are sodominant the company is broken uplike AT&T. Imagine Google’s searchor YouTube becoming regulatedmonopolies, like power and water.
Facebook Inc., Google parent Al-phabet Inc. and Amazon.com Inc.are enjoying profit margins, marketdominance and clout that, accord-ing to economists and historians,suggest they’re developing into anew category of monopolists. Theymay not yet be ripe for such ex-treme regulatory action, but as theyconsolidate control of their mar-kets, negative consequences for in-novation and competition are be-coming evident.
For example, some who studythe past compare Amazon andFacebook to Standard Oil, for theirsimilar quests to vanquish competi-tors and even their own suppliersthrough vertical integration.
Google, Facebook and Amazonalso bear resemblance to anothermonopolist of yore, the telegraphheavyweight Western Union, saysRichard du Boff, emeritus professorof economic history at Bryn MawrCollege.
“What [Western Union] was al-ways engaged in was clearing thefield, getting rid of anybody whowas in their way, either by takeoveror other means. The main motive,as I see it, was market domination.”
Experts aren’t, however, lumpingin Apple Inc. with the new monopo-lists. Like Microsoft Corp. and IntelCorp. before it, Apple is consideredmore vulnerable to competitive dis-ruption, despite the fact that it topsthe tech world in revenue, profitand market capitalization.
One way today’s monopolists aredifferent from the robber barons ofold is that they’re not exactly be-having like, for example, AndrewCarnegie, who turned armed guardson striking workers. And regulatorsdon’t particularly care if a company
SEANMCCABE
;BEZOS:
ZUMAPR
ESS;
PAGE,ZU
CKER
BERG
,COOK:
BLOOMBE
RGNEW
S;SU
ITS:
LIBR
ARY
OFCO
NGRE
SS
more and more people use it—be ita fax machine or Facebook. For Ap-ple, the size of its customer baseattracts developers who in turnmake the iPhone and iPad morevaluable.
Microsoft once had a platformwith similar dominance, and it wasthought that the network effects ofits large customer base would helpit stay dominant, says CatherineTucker, a professor of managementand marketing at MIT Sloan Schoolof Management.
But we’ve got network effects allwrong, argues Dr. Tucker, and wefailed to realize they’re just aslikely to empower upstarts to dis-rupt incumbents like Microsoft.Network effects helped smart-phones like the iPhone quickly gainpopularity, which marginalized Mi-crosoft’s Office and Windows plat-forms.
Even Apple’s own iTunes take-over of the music industry provedto be passing, as Spotify and otherstreaming services moved in.
Not everyone agrees that Face-book, Google or Amazon, as power-ful as they are now, will need to bereined in. “Today’s Amazon is to-morrow’s Macy’s,” says Dr. Wang.“Very few companies will be able toposition themselves for the new,next technology every time.” Thetechnology that gives firms an edgeeventually comes within reach oftheir competitors, she says.
In every monopoly-dominated in-dustry in history, whether oil, rail-roads, steel or utilities, even thegreediest competitors took decadesto consolidate their hold on mar-kets. Even at today’s pace, it’s prob-ably still early days for tech giants.
“Companies go one of twoways—some are in areas where de-clining returns to scale set in andthey get tamed by market pro-cesses,” says Dr. Weyl. “And othercompanies get tamed by gettingturned into a public utility. And un-til they are, they reap extortionateprofits.”
Jeff Bezos, Larry Page, MarkZuckerberg and Tim Cook evokemagnates of yore. (photo illustration)
Of�icial Sponsor of TheWall Street Journal’s The Future of Everything
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | B7
CAPTAIN CLASS | SAM WALKER
HUMAN CAPITAL
Cisco’s John Chambers and AmEx’s Kenneth Chenault are part of a waveof former top executives who are moving into venture capital
and offering counsel to young companies.BYVANESSA FUHRMANS
CHAMBE
RS:STEPH
ENMCCARTHY/SPORTSFILEVIA
GETTY
IMAGES;CHEN
AULT:M
ARK
LENNIHAN/ASSOCIAT
EDPR
ESS
Former Cisco chief John Chambers says his venture-capital fund is primarily a way for him to nurture startup CEOs.
SEANMCCABE
;CAR:
ZUMAPR
ESS
At the Geneva Mo-tor Show in 1971, anItalian industrialistnamed Ferruccio Lam-borghini unveiled anew sports car hiscompany hoped to
build. Then something remark-able happened.
Frantic onlookers began mob-bing the yellow prototype—bang-ing elbows to get a better view.
Three years later, when it wenton sale, the automotive presscouldn’t believe their stop-watches. Not only was this themost breathtakingly futuristicrolling sculpture anyone had everseen—but it also was the fastestproduction car they’d ever tested.
Road & Track said of Lambor-ghini’s Countach: “Its no-holds-barred, cost-no-object design is,on one hand, one of extremes andexcesses and, on the other hand,a mobile demonstration repre-senting the pinnacle of automo-tive design, technical achieve-ment and sophistication, the likesof which we will probably neversee again.”
Business leaders who aspire tobuild revolutionary products usu-ally consult the same handful ofcase studies: Apple’s iPhone,Nike’s iconic waffle sneakertreads or Pixar’s breakthroughanimated films. Along the way,they invest millions in market re-search, hire teams of engineersand helicopter-parent the project.
To build the Countach (KOON-tash), a car that changed thecourse of automotive history andappeared on the bedroom walls ofmillions of adolescents (includingmine), Mr. Lamborghini did ex-actly none of those things. Hesimply rounded up three preco-cious 30-somethings, gave them aclean sheet, ordered them tobuild the maximum car and leftthem alone.
It’s not surprising that busi-ness schools ignore this story.The Countach never made anyonea billionaire despite its $52,000original price tag ($296,000 incurrent dollars). Over 16 years,the chronically troubled companytook many more orders for thecar than it managed to fill; in all,only 2,049 were made.
What really emerges from thehodgepodge of books, trade arti-cles and firsthand accounts of theCountach’s construction is acounterintuitive model for lead-ing a team toward genius. SignorLamborghini’s brilliance lay increating the ideal conditions forsomething magical to happen.
The Countach took its namefrom a Piedmontese slang expres-sion one enraptured worker re-portedly blurted out upon seeingit for the first time. Looselytranslated, it means “holy s—.”
The bodylines were the workof Marcello Gandini, a 31-year-olddesigner from the Italian stylehouse Bertone, who’d drawn theshapely curves and eyelashlikeheadlamp accents of Lambor-ghini’s Miura. Like most sportscars of the era, the Miura gaveoff a distinctly anthropomorphicvibe. The Countach would put anend to all that.
Inspired by a space-age proto-type he’d penned for Alfa Romeo,Mr. Gandini drew a low-slung, an-gular, muscular body with a nosethat narrowed to a wedge. Hepushed the cabin forward, addedinsectile doors that swung dra-matically upward and used hexa-gons to give its body panels a
mathematical logic.This menacing design would
turn Mr. Gandini into a superstar,but that was only half the battle.The Countach also had to befast—and roadworthy.
Paolo Stanzani, the 33-year-oldengineer tapped to build the car’smechanical underpinnings, knewit would be difficult to fit a hulk-ing V-12 engine behind the driverin a space only 42 inches tall. Forbetter weight distribution, hemounted the engine backwardwith the output shaft in front.Thechassis he commissioned was ahandbuilt one-of-a-kind tubularspaceframe—itself a work of art.
The crucial job of refining theCountach fell to the third teammember, Bob Wallace, a 32-year-old New Zealand-born test driver.Mr. Wallace wanted to avoid aflaw in the Miura, whose aerody-namics had made it unstable athigh speed, but didn’t have accessto a wind tunnel. He resorted togluing strands of cloth to thebody and filming them at speedto measure airflow.
As his team worked, Mr. Lam-borghini mostly let them be.When he did check in, it was usu-ally to express skepticism aboutwhether the Countach would ac-tually work. Before agreeing toput the car into production, heordered Mr. Wallace to ferry it toan endurance race in Sicily andreturn it to the factory with theengine still running.
The Countach wasn’t perfect—or practical. Climbing in and outwas a struggle, rear visibility wasvirtually nonexistent and therewas no room for a proper suit-case. After Mr. Lamborghini wasforced to sell a controlling stakein the car maker in 1973, subse-quent owners debased it withgarish skirts, flares and spoilers.
Nevertheless, the Countach’slegacy endures. The original“periscopio” model that causedpandemonium in Geneva nowfetches more than $1 million atauction. Seeking inspiration inthe 1990s, General Motors bor-rowed a Countach, blindfolded agroup of designers and let themfondle its bodylines with theirbare hands.
There’s no question that the
Countach contributed to Lambor-ghini’s renaissance under its cur-rent owner, Volkswagen’s Audi.The brand is currently workingon an electric supercar.
Sometimes, future-alteringproducts are works of a singulargenius. Other innovations, suchas the iPad’s multitouch screen orthe aperture grilles inside Sony’s1968 Trinitron color television,draw on years of tireless re-search. Recent studies suggestcompanies can achieve consistentgains by soliciting lots of smallinnovative ideas from employees.
What the Countach really of-fers is a counterpoint to theSteve Jobs model: the notion thata team leader who inspires geniusmust be a hard-driving visionaryrelishing getting into the weeds.
The late Harvard psychologistRichard Hackman, who studiedmany kinds of effective teams,found that once the actual workbegan, team leaders had limitedimpact. What mattered mostwere intelligent preparations.
Ferruccio Lamborghini mighthave gotten lucky with the Coun-tach, but there’s no question thathe set a favorable stage. He’dbuilt a capable factory and a bril-liant engine and infected hisworkers with high standards. Hisfinest achievement, however, wasidentifying three emerging tal-ents with fresh eyes who weren’tmarried to the status quo. Hesimply told them to build some-thing incredible—then went wa-ter skiing.
The hard work of leadershipwas already done.
Lamborghini’sGuidetoGenius:GetOutoftheWay
What the Countachreally offers is a
counterpoint to theSteve Jobs model. I
n his two decades running Cisco Systems Inc.,John Chambers transformed what was asmall networking-equipment company into atech giant. His second act? Investing in andcoaching more than a dozen startups withthe hope of creating the next Cisco.
After retiring as Cisco’s executive chairman lastyear (he stepped down as chief executive in 2015),the 68-year-old Silicon Valley pioneer launched aventure-capital fund, JC2 Ventures, with $100 mil-lion of his own money. But it’s not just his moneyat work. To the fledgling companies he backs, per-haps more important is the value he brings as a“chief guru,” as one startup founder dubbed him.
He estimates that he talks or texts, on average,with each CEO in his portfolio three or four timesa week. He visits potential customers with JörgLamprecht, CEO of Dedrone, a 75-employee drone-security firm. He interviews finalists for any lead-ership role at Uniphore, a 120-person speech-ana-lytics technology firm in India.
“It’s not about the investments,” Mr. Chamberssays about his portfolio. “I want to first be a stra-tegic partner with the CEO, where I am his or hermost trusted adviser, mentor—a coach.”
Mr. Chambers is part of a wave of big-time CEOsand executives who, instead of more conventionalretirements of just sitting on a couple of big-com-pany boards, are embarking on second chapters asguiding lights on the startup scene. And morecould pursue this route as Wall Street’s perfor-mance demands and technological disruption makethe top job at megacorporations less hospitable.
Others who have taken to the startup path in-clude former Time Warner Inc. CEO Richard Par-sons, who has teamed up with Rachel Lam, thelongtime chief of the media company’s investmentarm, to fund their own VC firm, Imagination Capi-tal. And American Express Co.’s Kenneth Chenault,who retired this year after 16 years at the credit-card firm’s helm, is now chairman of General Cata-lyst Partners, whose investments include Airbnband Warby Parker.
One factor behind the trend: Many CEOs are call-ing it quits with more personal wealth than everbut before they’re ready to ride quietly off into thesunset, says Donald Hambrick, professor of man-agement at Penn State’s Smeal College of Business.
Working with startups “is stimulating, but it’snot grueling in the way being a public-companyCEO now is,” Mr. Hambrick says. “If Chambers’s in-vestments go bad, he’s not going to be vilified orscrutinized in the same way he would if he werestill at Cisco.”
Nor is Jeff Immelt, another former CEO-turned-venture capitalist. The longtime leaderof General Electric Co. spent much of his tenurethere working to transform GE into a digitalindustrial company but left amid grow-ing investor pressure to reverseGE’s slumping stock price andboost its stagnant profits.After withdrawing fromthe race to become UberTechnologies Inc.’s CEOlast year, Mr. Immeltjoined venture-capitalfirm New EnterpriseAssociates in Febru-ary, where he has saidhe hopes to help en-trepreneurs build
tech and health-care startups. Mr. Immelt declinedto comment.
Another force behind the CEO-to-VC track: Asstartups wait longer to go public or run into cul-ture problems, as with Uber, more investors arelooking for experienced operators to help themscale and navigate the pitfalls that can come withgrowing so fast.
Mr. Chambers says he’d now rather nurture abunch of small companies than run another big onefor a different reason: Startups, he says, will createmost of the new jobs needed to replace the tens ofmillions soon destroyed by artificial intelligence andautomation. “Big companies will just not be able tomove with the speed of innovation,” he says.
It’s too soon to determine whether corporatesuccess will translate to the VC world, but Mr.Chambers’s playbook for identifying startups is thesame he used to snap up more than 180 companiesduring his tenure at Cisco. If the company isn’tpoised to take advantage of a market in transition,“we don’t do it,” he says. “Then it’s the CEO—isshe or he a potential world-class CEO who reallywants to be coached?”
Though he won’t disclose how much he invests,he says he typically buys between a 3% and 15%stake in the company.
Usually the CEOs approach him first. “I stalkedhim,” said Dedrone’s Mr. Lamprecht, who met Mr.Chambers after his company was named one ofthree winners of a Cisco innovation challenge inlate 2016. After sending him repeated texts after-ward, Mr. Lamprecht finally got a response to oneshowing how Dedrone’s technology was securingthe World Economic Forum from rogue drones atits annual conference in Davos, Switzerland, whereMr. Chambers had just arrived. The next month,Mr. Chambers bought a stake in Dedrone for an un-disclosed amount.
Uniphore CEO Umesh Sachdev says Mr. Chambersmentored him for nearly a year before buying a 10%stake in the company this past November. Speakingat MIT Technology Review’s “Innovators Under 35”event in New Delhi in 2016, Mr. Chambers offered tohold monthly group mentoring sessions via videowith Mr. Sachdev and the other honorees. Prettysoon, “I was spending the most time with him—Ijust had all these questions,” Mr. Sachdev says.
At times this year, they have spoken several timesa day. Mr. Sachdev was overhauling his
management team and planning torelocate to the Bay Area this sum-mer to spearhead Uniphore’sNorth American expansion, and hewas worried about a potentialleadership vacuum in India andthe signal the move would send tohis staff there.“It seemed hard, like too many
things changing at once,” he says.“It helps to have someone like John
Chambers tell you, ‘I’ve been throughthis multiple times—you’ll get throughit.’ ” He also had Mr. Sachdev mapthree different scenarios for howthe changes might play out—includ-ing a media leak of the news—andplan for each, then gave pointers onhow to present the changes to hisboard and employees.
“He’s as involved as I want him tobe,” Mr. Sachdev says. “He neverforgets to say, ‘This is my advice,but the choice is yours.’ It just en-courages me to get him more andmore involved.”
Kenneth Chenault:From American Expressto venture capital.
Second Act forCorporate Bigwigs:StartupWhisperers
.
�
B8 | Saturday/Sunday, June 2 - 3, 2018 * * * * * * THEWALL STREET JOURNAL.
Adecade after the col-lapse of LehmanBrothers, the world isstill debating thecauses of the financialcrisis—down to the
meaning of money itself.In buttoned-down Switzerland,
that debate is taking the form of anationwide referendum set forJune 10. Voters are being asked toconsider fundamental questionsrooted in the crisis: What ismoney; who creates it; and howsafe is it? And they’ll have achance to blow up one of the foun-dational features of global finance:the ability of banks to createmoney with just a few keystrokes.
That’s right: Now, if a bankgives you a loan, it can prettymuch create the money on thespot. It’s something that banks doevery day around the world.
But if the Swiss referendumpasses, all money creation therewould have to be done directly bythe country’s central bank.
Supporters say this is howmost of the public assumes thatall money is created already, sotheir idea isn’t that radical. Yetsome opponents compare the ideato the gold standard, somethingthat they contend might soundgood in theory but is entirely un-workable in practice.
Behind the initiative is Han-sruedi Weber, a former school-teacher turned financial reformer.He is a founder of the Vollgeld Ini-tiative, known in English as Sover-eign Money. The group amassedenough signatures to put the pro-posal on the ballot. Under the cur-rent system, he says, “money isdebt.” Vollgeld would “separate
country synonymous with finance.Under Vollgeld, the Swiss centralbank would directly control themoney supply. Electronic depos-its—basically the money peoplesee in their bank statements in-stead of their wallets—would beconverted to central-bank moneyissued by the Swiss National Bank.
Opponents of Vollgeld saySwitzerland would be going italone if it upended its money-cre-ation system, weakening its com-petitiveness while making itharder for banks to extend creditand overburdening the centralbank with decisions on whoshould be getting loans and whoshouldn’t. Their most effectiveargument may simply be that thecurrent system isn’t broken—Switzerland’s economy is doingwell—and doesn’t need fixing.
Under the current system, whena borrower is approved for a mort-gage, the bank doesn’t take exist-ing money from a vault. Instead, itcreates an electronic deposit forthe borrower, which the borrowertransfers to the seller’s bank ac-count. Much of the growth inmoney in circulation is throughbank-created deposits. Regulatorylimits, such as capital ratios, keepbanks from making endless loans.
Of the 645 billion Swiss francs(about $652 billion) in circula-tion, only about 85 billion francsare notes and coins.
Under the Vollgeld proposal,banks would have to actually havemoney before they lend it out. Thecentral bank would extend loans tobanks to keep the supply of avail-able money sufficient for the econ-omy. But the onus would be on thecentral bank to determine the
How money is created
Vollgeld proposal scenarioCurrent scenario
Banks are central to the money creation process in theglobal economy, but a Swiss initiative being voted onJune 10 wants to put its central bank in charge.
Less than one-sixth of the francsin circulation in Switzerland are innotes and coins.
Sources: WSJ analysis of economic research reports; UBS; Swiss National Bank (francs in circulation) Andrew Barnett/THEWALL STREET JOURNAL.
Central bank influences pace ofmoney creation by adjustinginterest rates, which causesdemand for credit to ebb and flow.
Commercial bank approves loanto borrower.
Commercial bank creates electronicmoney, deposits loan proceeds inborrowers account.
3Borrower
Commercialbank
Central bank
1
2
3
BorrowerCommercial
bank
Central bank
1
2
3
Central bank lends money tocommercial bank if theinstitution can’t back theloans with its own funds orby securing funds elsewhere.
Commercial bank relendscentral bank created moneyto borrowers.
1
1
2
2
Money in circulation
Electronic money Cash
700
0
100
200
300
400
500
600
billion Swiss francs
’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18’10
FINANCE
BY BRIAN BLACKSTONE
AShockingChallenge to the Banking System
Should banks still be able to create money on the spot? The Swiss put it to a vote.
money from credit,” he says, lead-ing to a more stable economy.
When banks create electronicmoney, it becomes a liability ontheir balance sheet while the loanis an asset. If the borrower can’trepay the loan, the bank’s profittakes a hit. If this happens on alarge scale, as it did in the U.S.subprime crisis a decade ago, thebank could be wiped out. Even ifcustomers only fear this, theymight start withdrawing theirmoney en masse.
Under Vollgeld, banks could stillgo bust but the money wouldn’tdisappear because it would no lon-ger be on the balance sheet of the
bank the way electronic money is.Similar ideas to Vollgeld stretch
back at least to the 1930s and areAmerican in origin. In the midst ofthe Great Depression, a group ofU.S. economists presented whatbecame known as the “ChicagoPlan” of banking reforms thatwould have required all lending tobe backed by central-bank-createdmoney. It was never adopted. Afterthe 2008 financial crisis, the ideagained traction among campaign-ers in Iceland and the U.K. Nextmonth’s Swiss referendum hasgiven the idea of sovereign moneyits biggest public airing yet.
It’s an unlikely proposal in a
‘In a sovereign-moneysystem, there could beno bank run because the
money would exist.’
many traded below the value oftheir cash per share.
Financial reporting wassparse, and making the businesslook even worse than it waspaid off—for insiders.
“Corporation treasurers sleepsoundly while stockholders walkthe floor,” growled Mr. Graham.
Today’s highflying marketlooks like a polar opposite. Butinformation is still power.
To assess profits, investorshave long looked to net income,or earnings per share. Over thepast decades, companies havecome up with new measures ofprofit.
Chief among them: Ebitda, orearnings before interest, taxes,depreciation and amortization.This is a modified measure ofthe cash generated by the busi-ness.
The key word there is modi-fied. This isn’t cash flow.
Yet, in a disturbing coalitionof the willing, companies andprofessional investors alikehave colluded to flatter profitby removing costs from re-ported earnings.
Concerns about Ebitda goback at least to the internetbubble of the late 1990s. In2002, the Securities and Ex-change Commission imposed arule requiring companies to ex-plain how they calculate Ebitdaand to state it doesn’t conformto accounting rules.
In 2003, Warren Buffett’sbusiness partner, CharlesMunger, called Ebitda “bullshitearnings.”
A long bull market has en-abled companies to produce alot more of it. Today, Ebitdaand even more outrageousclones are everywhere.
The mutations include Ebit-dac (with a change in acquisi-tion costs used by insurers);Ebitdao (with option expense, acost of paying management);Ebitdap (pension and other re-tirement benefits); Ebitdar (thecosts of leasing real estate orairplanes, depending on the in-dustry), Ebitdare (losses, gainsand other adjustments on realestate); Ebitdas or Ebitdasc(stock-based pay for manage-ment); and Ebitdax (explorationcosts for oil-and-gas compa-nies).
Can Ebitdaft be far behind?Companies say they provide
these alternatives to make earn-ings easier to compare and toreduce the impact of unusualevents.
But businesses in the sameindustry don’t have to use thesame definition for these mea-sures.
WeWork Cos., the provider ofshared office space, has evencreated what it calls “commu-nity-adjusted Ebitda.” This ex-cludes such basic costs of doingbusiness as marketing, develop-ment and administrative ex-penses.
Crazy? Yes. But analysts andfund managers turn to thesenumbers first, not last. Bankscommit to monitoring compa-nies’ creditworthiness notagainst net income but againstmeasures like “adjusted Ebit-dax.” Companies, meantime, usethese numbers to award bo-nuses. When managers’ pay isbased on a “costs-don’t-count”metric, that sort of thinkingmay pervade other decisions aswell.
“With all the additions andsubtractions to Ebitda, I’m sur-prised nobody’s tried multiply-ing,” says David Zion, who ana-lyzes corporate financialreporting at Zion ResearchGroup in New York.
So far this year, companieshave filed more than 450 docu-ments with the SEC tacking suf-fixes onto Ebitda, according toIntelligize, a financial-informa-tion firm.
Because these metrics aren’tpart of official accounting rules,they aren’t audited. Manage-ments are also free to changethe definitions, says HowardSchilit, co-author of the book“Financial Shenanigans: How toDetect Accounting Gimmicksand Fraud in Financial Reports.”
In recent years, “manage-ments have always wanted toput as positive a spin as possi-ble on their results so the stockwill keep rising,” he says. “Nowthey can do that with a lot lessrisk.”
If professional portfolio man-agers want to win back thehearts and minds of investors,they should stop participatingin the farce of fanciful earn-ings—before it does seriousdamage to the market.
ContinuedfrompageB1
FancifulMeasuresOf Profit
STEFANWER
MUTH
/REU
TERS
The Federal Palace inBern. The Swiss willvote on broad moneymatters on June 10.
amount of lending available, aform of monetary policy that wasmore common in the early days ofcentral banks in the 19th and early20th centuries.
The onetime schoolteacher andhis allies are up against some pow-erful opponents. Switzerland’s cen-tral bank chief, whose powerswould expand greatly underVollgeld, has slammed it as a “dan-gerous experiment” that would“inflict great damage” by raisingborrowing costs and damaging in-vestment. The plan is also opposedby parliament, the executivebranch and the country’s commer-cial banks. “I don’t expect theSwiss people to be suicidal and ap-prove it,” UBS Group AG Chief Ex-ecutive Sergio Ermotti said re-cently, without going into details.Indeed, recent polling suggests theSwiss are solidly opposed to it.
Switzerland’s direct-democracysystem creates these types of Da-vid-versus-Goliath scenarioswhereby citizens like Mr. Weber—whose organization MoMo (forMonetäre Modernisierung) took itsname from a little girl’s characterin a Michael Ende novel—can takeon the elites of politics and fi-nance. Vollgeld enthusiasts havecampaigned for the referendumwith fliers, sandwich boards and agiant piggybank touring Swiss cit-ies to argue that electronic depos-its are nothing more than glorifiedvouchers for money that might ormight not exist.
“It would be like creating yourmoney and going shopping with it.Everyone would like to do this. Butit is only the banks that have theability,” said Joseph Huber, profes-sor at Germany’s Martin-Luther-Universität, whose writing on thetopic inspired Mr. Weber to launchVollgeld. “Central banks have lostcontrol, and the whole idea is toregain control of money creation.”
Supporters say that the Vollgeldplan would limit destabilizingcredit booms and busts while pro-tecting the economy from costlybailouts. “In a sovereign-moneysystem there could be no bank runbecause the money would exist,”said Mr. Huber.
Aleksander Berentsen, professorat the University of Basel, sees thevote as an abuse of Switzerland’sdirect-democracy system, underwhich people can obtain a referen-dum by gaining 100,000 signa-tures. In the past, the country hasgone to the polls to decide on end-ing television fees (no), phase outnuclear power (no), or purchasemilitary jets (no, but stay tunedfor another vote by 2020).
“It has become a game, likekindergarten, but this is going toradically affect the way we live,”he said, by making Switzerland alaboratory for untested economictheories.
Even if Vollgeld is rejected, Mr.Weber thinks he has planted theseeds for future success. He seesparallels with another long-shotreferendum two years ago: BasicIncome. The plan, which wouldhave guaranteed each Swiss resi-dent a minimum income, wassoundly defeated but got a lot ofexposure. The idea has gainedsteam in Switzerland and else-where since then.
“It’s the same with Vollgeld,you can’t anymore put Vollgeldaside,” Mr. Weber said. “If wechange this here, everyone willknow that it’s not necessary tohave a debt-accumulating systemthat will inevitably crash.”
.
�
B12 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
California’s state-sponsoredretirement-saving plan, ex-pected to become the coun-try’s largest when it launchesnext year, was hit with a law-suit in the first major legalchallenge to states developingor authorizing auto-enroll-ment programs.
The nonprofit HowardJarvis Taxpayers Associationfiled the suit Thursday in U.S.District Court for the EasternDistrict of California, seekingto invalidate the CalSaversprogram on the basis that itviolates federal pension laws,said Jon Coupal, president ofthe association. The suit alsoseeks an injunction to stoppublic funding of the program.
The nonprofit’s legal argu-ment is that states can’t im-pose a retirement plan re-quirement because those plansare already regulated under afederal law, the Employee Re-tirement Income Security Actof 1974, or Erisa, which gov-erns 401(k)-style plans.
“This looked to us like sig-nificant government over-reach,” said Mr. Coupal, whoalso cited the “administrativeburden on employers” such asthe association, which doesn’toffer its employees a retire-ment-saving plan.
California Treasurer JohnChiang said in an email thestate remains confident that itis on strong legal ground.
Almost a dozen states ei-ther have a retirement pro-gram on the market or are de-veloping one.
Oregon last summer becamethe first to start requiring em-ployers that don’t offer a re-tirement plan of their own togive employees access to astate-run plan, by automaticallyenrolling them in individual re-tirement accounts invested inmutual funds. Employees havethe right to opt out.
by reducing retirees’ relianceon public-assistance programs,including Medicaid.
“The Howard Jarvis Tax-payers Association shockinglyfails to recognize that if wedon’t help our citizens build anest egg with their ownmoney, they will ultimately be-come wards of the statewholly dependent on publicassistance for their most basicneeds,” Mr. Chiang said in astatement.
California estimates that6.8 million people who lack ac-cess to a retirement-savingplan at work would be en-rolled under the program,which requires employers withfive or more employees to par-ticipate.
CalSavers has borrowed$1.5 million from the state tofund its startup expenses, asum the program expects torepay over a few years with a
portion of the fees partici-pants pay on their balances.
CalSavers is separate fromthe California Public Employ-ees’ Retirement System, whichprovides pensions for Califor-nia state employees.
The legality of state auto-enrollment programs wasthrown into question last yearwhen Congress scrapped twoLabor Department rulings thathad paved the way for thoseprograms by clarifying thatthey would not be covered byErisa.
Some states have adoptedapproaches considered lessvulnerable to legal challenges.Washington state, for example,avoided a coverage mandate infavor of establishing a state-run marketplace to help smallcompanies shop for a retire-ment plan if they choose to of-fer one. Its program recentlybecame the second to launch.
Federal investigators are ex-amining stock trades tied tothe former CEO of financial-technology company Heart-land Payments Systems Inc.in the run-up to its $3.8 billionsale to a larger rival two yearsago, according to an attorneyfor the former executive.
The trades first came tolight this past week in abreach-of-contract lawsuit thatHeartland, now part of GlobalPayments Inc., filed against itsformer chief, Robert Carr, infederal court in New Jersey. Inthe complaint, Heartland ac-cused Mr. Carr of passing con-fidential material informationabout the company’s impend-ing sale to his girlfriend andtransferring around $1 million
Illinois is expected tolaunch a similar pilot programthis summer, and California isscheduled to follow suit to-ward the end of this year or in2019.
Proponents of state-run re-tirement programs say they
are concerned about the esti-mated 42% of private-sectorworkers who don’t have accessto a workplace retirement-sav-ing plan, many of whom don’tsave at all. State legislatorsalso are trying to save taxpay-ers money over the long term
‘This looked to uslike significantgovernmentoverreach.' Feeling the Pain
Difference in the yield ofDeutsche Bank’s three-yearsenior note and its benchmark
THEWALL STREET JOURNAL.Source: Thomson Reuters
2.0
0.8
1.0
1.2
1.4
1.6
1.8
percentage points
’182017
to a bank account in her nameso she could purchase Heart-land stock before the deal wasannounced in December 2015.
Mr. Carr is fully cooperatingwith the federal investigation,which is being carried out bythe Securities and ExchangeCommission and the JusticeDepartment, and “is confidentthat the facts will confirm thathe acted appropriately,” his at-torney, Michael McGovern ofRopes & Gray, said in an email.
An SEC spokesman declinedto comment, while a JusticeDepartment representative hadno immediate comment.
Mr. McGovern said “keyfacts are misrepresented in thelawsuit” and “critical exculpa-tory information known to [thecompany] was intentionallywithheld.”
BY PETER RUDEGEAIR
Former Heartland CEOFaces Federal Investigation
Having sold off in recentdays, the bonds of troubledlender Deutsche Bank AG wererelatively untroubled Friday bya credit-ratings downgrade.
Early Friday, S&P GlobalRatings downgraded DeutscheBank’s long-term credit ratingone notch to BBB+, citing “exe-cution risks” in a “deeper re-structuring of the businessmodel than we previously ex-pected.” S&P said the outlookis stable.
The yield spread over thebenchmark on Deutsche Bank’sthree-year senior note haswidened to 1.867 percentagepoints from its low for thisyear of 0.912 points in Febru-ary, indicating that marketshave come to see the bonds asriskier. However, much of thatmove took place during thesecond half of May, with Fri-day’s move relatively modest.
“We appreciate S&P’s state-ment that ‘management is tak-ing tough actions to cut thecost base and refocus the busi-ness in order to address the
bank’s currently weak profit-ability,’” the bank said in re-sponse to the ratings cut.
The ratings decision couldraise the bank’s cost of doingbusiness and comes a day afterThe Wall Street Journal re-ported that the Federal Re-serve last year designated thebank’s sprawling U.S. businessas being in a “troubled condi-tion,” a rare censure for a ma-jor financial institution. ADeutsche Bank spokeswomansaid the bank doesn’t discuss“specific regulatory feedback.”
Deutsche Bank shares rose2.8% Friday, having lost 7.2%Thursday to €9.16, their lowestXetra exchange close, accord-ing to data going back to 1991.
BY LAURENCE FLETCHER
DeutscheBondsFirm AfterDowngrade
Consumers in parts of theU.K. and Europe couldn’t useVisa Inc. cards for much ofFriday after a system failureprevented transactions frombeing processed, the companysaid, a disruption that flum-moxed both businesses andconsumers. The problem wasresolved later in the day.
“Visa had a system failurethat impacted customersacross Europe,” the companysaid. It added that the prob-lem was the result of a hard-ware failure and that the com-pany didn’t believe it “wasassociated with any unauthor-ized access or maliciousevent.”
Most Visa card transactionsin Europe are processed in onelocation outside of London.That is where the company’sinvestigation was focused andwhere the hardware failurewas found.
Visa apologized to card-holders and merchants, sayingit “fell well short” of its goalof ensuring that all Visa cardswork reliably 24 hours a day,365 days a year.
The company said that bylate Friday Visa cards in Eu-rope were operating at closeto normal levels.
The outage was a blow toVisa, the largest network inEurope, accounting for about66% of card purchase volumethere as of 2016, according tothe latest data from the NilsonReport. Visa comprises about50% of card purchase volumein the U.K. Cards that run overother card networks such asMastercard Inc. and AmericanExpress Co. weren’t affected.Banks said ATM transactionsweren’t affected.
Merchants ranging frompubs to supermarkets took toTwitter to apologize to cus-tomers for the outage. Con-sumers, meanwhile, wereforced to use other cards orcash.
“This is really terrible,”said Heather Bateman, 29years old, as she fumbled withher purse while trying to payfor drinks at the Globe pub incentral London. “I am going tohave to go to the bank and getcash.”
Signs on beer pumps in thepub warned of disruption tothe payments system, al-though this didn’t seem toslow business on a sunny Fri-day evening in London.
“This is pretty old school,”said one man as he handedover cash to pay for some Pi-not Grigio wine. “AmEx mustbe loving this.”
BY ANNAMARIA ANDRIOTISAND MAX COLCHESTER
Visa Hit by OutageIn Parts of Europe
COMMERCIAL REAL ESTATE
����
������� ������ ���� �����
������������ ��� �
������ ����������� �������� �� ������ �� �� �� !"���� ���� #�� $ % �����&� '��� � (#�)*
�'�+,-!�+ '�-.'�-�+!+- !/0+1'�
������� �� ����� �� �� ����������� ����� �� ���� ����
������ ������� ���
������ ��� ���� �������� ������� ��������
2�3))�3*��4��*������������ ��� �
�-!5-6 �16� 6/- 7/58 22� �)23
������ ��������� �����
0!55 �'� �'� ��-- 0'5'� 0!+!5'. 923)4
%���� � � :2��))) � :����)�)))
�� ����� �� �� ������ ���� �� �� �� �� ��������� �� ����� �� ������ ��� ��� �!��"!
The MarketplaceADVERTISEMENT
To advertise: 800-366-3975 orWSJ.com/classifieds
BUSINESS OPPORTUNITIES
��������� �� ���� ���� ����� ������ ������� ��� ���� �������������� ����� ���� �� ! � ��"������ ������ # �$ �% ����& �� ����������
��"������' (� )� (��� ��*+�,
����������������� ���������������������� �������� ��%����� -�����
������� ��� � �
COMMERCIAL REAL ESTATE
�������� �� �
������ �������� ������������� ����������� �� ������� �� ��� �������� ������� ��� ��� �� �� ��� ������ � �� ������
� ����� �� � ��� !"���� ��� ����� �"����� ��� ���
�������� ��� ����������
��� ���� ��� ���������� ������� ����� ������� �������!���������������"�#�
$���� %����� ����� ���������������!���������������"�#�
������� �� ������ ��� ��������
���� ��������������� ��� ����
���� ������� ��� ������������� �������� ���� ��� �������
�������� � ������ ������ ���� ����� � ����� � ����� � ������� �� ���
� ����� �������
��� ��������� �� ��� �����
���������������������� ���
��� � ������ ���� �!����
TRAVEL
Save Up To 60%First & BusinessINTERNATIONAL
Major Airlines, Corporate TravelNever Fly Coach Again!www.cooktravel.net(800) 435-8776
PORSCHE
ShowroomADVERTISEMENT
To advertise: 800-366-3975 orWSJ.com/classifieds
������� ���� ��������������� ���� ��� ������� ������ ����
��� ���� ��������� ������
������ ���� ���� ������ � "�������� �� ����
���������������������������©2018 Dow Jones & Company, Inc.
All Rights Reserved.
SHOWROOM(800) 366-3975
[email protected] information visit:
wsj.com/classifieds
FINANCE NEWS
State Sued on Saving Plan
Treasurer John Chiang, right, says California is on strong legal ground, with state Sen. Kevin de Leon.
RICH
PEDRO
NCELLI/ASSOCIAT
EDPR
ESS
BY ANNE TERGESEN
N Y
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | B13
Risk OnInvestors bought shares of technology companies after anupbeat jobs report, while selling haven equities such as utilities.
THEWALL STREET JOURNAL.Source: WSJ Market Data Group
2
–2
–1
0
1
%
9:30 a.m. noon 4 p.m.
TechnologySelect SectorSPDR ETF
Dow JonesIndustrialAverage
Utilities SelectSector SPDRETF
Crude DeclinesAs Focus ShiftsTo Higher OutputOil prices declined on Fri-
day, weighed down by risingU.S. production and concernsover a potential increase inoutput from other major ex-porters, including Saudi Ara-bia and Russia.Light, sweet crude for
July delivery fell 1.8% to$65.81 a barrel on the NewYork Mercantile Exchange, itslowest close since April 10.U.S. crude production has
risen to weekly highs of 10.47million barrels a day, accord-ing to the U.S. Energy Infor-mation Administration. Basedon Friday data, active oil rigsin the U.S. rose by two to861, the highest level sinceMarch 2015.Meanwhile, news that
Saudi Arabia and Russia werenearing a deal to ramp upcrude production has spookedinvestors, pushing pricesdown to seven-week lows.The Organization of the
Petroleum Exporting Coun-tries—of which Saudi Arabiais the de facto head—and 10countries outside the oil car-tel, including Russia, havebeen cutting output byroughly 1.8 million barrels aday since the start of 2017.The coordinated effort, whichis set to expire at the end ofthis year, has helped to boostprices by more than 40%.“If they’re going to start
increasing production, you maysee cheating across theboard,” said Tariq Zahir, man-aging member of Tyche Capi-tal Advisors. “We may start tosee a build of supplies again.”Also, the Energy Depart-
ment on Thursday said crudeinventories fell by 3.6 millionbarrels in the week endedMay 25, but stockpiles ofgasoline and distillates rose, abearish sign for demand.
—Stephanie Yangand Christopher Alessi
Department reported that theeconomy added 223,000 jobsin May, compared with the190,000 average forecast byeconomists in a Wall StreetJournal survey. The depart-ment also said that averagehourly earnings rose 0.3% inthe month and 2.7% on an an-nual basis, while the unem-ployment rate fell to 3.8%, thelowest since 1969, and lowerthan the 3.9% predicted byeconomists surveyed by theJournal.
Fed-funds futures, which in-vestors use to bet on centralbank policy, reflected 36%chances that the Fed wouldraise interest rates four timesin 2018. That is up from 26%on Thursday, according to data
from CME Group Inc. Fed offi-cials had forecast three in-creases for the year at theirmeetings in December andMarch. They raised rates inMarch and are widely ex-pected to raise them again attheir next meeting, which con-cludes June 13.
The data were strongthroughout the report, and“the most important was aver-age hourly earnings,” saidLarry Milstein, managing di-rector of Treasury and agencytrading at R.W. Pressprich &Co. “The Fed’s watching that.”
Many investors and policymakers have expected tighterlabor markets to push wageshigher, which would lead to anacceleration of inflation as ris-
ing pay could lead to increasesin demand for goods and ser-vices. Inflation presents a riskto the value of governmentdebt by reducing the purchas-ing power of their fixed inter-est payments.
One hour before the report,yields jumped after PresidentDonald Trump said Friday onTwitter that he was “lookingforward” to the release of theLabor Department unemploy-ment figures.
“The market was reactingto a really strong report be-fore it was released,” said RayRemy, head of fixed-incometrading at Daiwa Capital Mar-kets America Inc. “Unfortu-nately, Trump’s tweet took alittle fire out of the report.”
U.S. government bondsweakened after a labor-marketreport showed faster-than-forecast growth in jobs and
wages.The yield on
the 10-yearTreasury noteclimbed to
2.895% on Friday from 2.824%the day before. The two-yearTreasury yield, which is typi-cally more responsive to ex-pectations for Federal Reserveinterest-rate policy, rose to2.472%. The yields on both se-curities have fallen for twoconsecutive weeks. Yields riseas bond prices fall.
Yields rose after the Labor
BY DANIEL KRUGER
Treasurys Retreat on Strong Jobs Figures
CREDITMARKETS
A worker on a Chevron oil rig near Midland, Texas.
DANIELACKER
/BLOOMBE
RGNEW
S
Countries often pay off theirdebt early. But Italy’s decision toretire a slug this week feels likegood timing.The Ministry of Economy and
Finance said Thursday that itwould buy back a total of €500million ($585 million) in nominalbonds that mature in 2019 and
2020.Italian government bonds
were at the center of a globalmarket selloff this week as in-vestors grappled with the frac-tious politics of a country withone of the world’s biggest debtpiles.On Tuesday, Italian two-year
government bonds had theirworst trading day since recordsstarted in 1989.They have since recovered
and on Thursday, Rome sent itsmessage to markets: We havethis under control.To be sure, bond-buyback op-
erations are nothing unusual.
They’re part of a national trea-sury’s tool kit and are applied toreduce near-term redemptions.And for Italy, there is still a
long way to go.The country has a debt-to-
gross-domestic-product ratio ofmore than 130%.
—Emese Bartha
enough to lift the Dow indus-trials out from under theheavy selling it suffered ear-
lier in the week,when politicaldrama in Italyand the Trumpa dm i n i s t r a -
tion’s push to enact tariffs onkey allies sent the Dow downby triple digits during two ofthe four trading sessions.
The blue-chip index of 30stocks fell 0.5% for the week,while the S&P 500 and Nasdaqrose 0.5% and 1.6%, respectively.
Trade tensions continued tosimmer after the U.S., Canada,Mexico and the EuropeanUnion traded barbs andthreats over the Trump admin-istration’s decision to moveahead with tariffs on steel andaluminum. But the lack of anymeaningful developments onFriday gave some trade-sensi-tive stocks a reprieve.
Two often-looked-at tradebellwethers in the market,Boeing and Caterpillar, roseFriday. Analysts say the twostocks are among the publiclytraded companies that couldbe stung by protectionisttrade policies.
Shares of Boeing added$4.56, or 1.3%, to $356.72,while Caterpillar rose $1.61, or1.1%, to $153.52.
Consumer-staple stocks inthe S&P 500, which fell underpressure Thursday after Can-ada and Mexico announcedthey would place tariffs on anumber of U.S. food and agri-
ContinuedfrompageB1
sanctions against Iran, whichanalysts say will likely curbsupply from the country.
“Even with the events inthe Middle East and the geo-political price premium, themarket volatility is notscreaming panic,” said ThibautRemoundos, chief executive ofconsultancy CommoditiesTrading Corp.
Volatility has fallen acrossmost markets in recent years,but stocks are now whipsaw-ing more as central bankswithdraw stimulus and politi-cal risk rises.
Brent fell 1% to $76.79 Fri-day, off from more than $80 abarrel last month. It may feellike oil is swinging around alot, but it isn’t. Swings in pricesare currently at the lower endof a historical range thatstretches back over 20 years.
OPEC and its ability tomove prices isn’t a new factor.But the addition of U.S. oil ex-ports has added another largesupply stream that can re-spond to price signals. Shaleproducers can react to pricemoves within months, whereasother sources of crude—such
as deep water oil fields—cantake years. This faster re-sponse time has muted swingsin prices. When the oil pricerises, shale producers turn onthe taps, when it falls theyease off, capping big moves ineither direction.
“Shale is contributing a lotin the sense that it’s givingpeople comfort that even if in-ventories fall a lot or build,production is going to adjust,”
said Bank of America MerrillLynch’s Mr. Blanch.
The supply cuts agreed onby OPEC and its allies in 2016put a cap on supply fromabout half of global produc-tion, affecting just how highthose inventories can rise.
It was Washington’s deci-sion to reinstate sanctions onIran that sent Brent above $80a barrel. But that led SaudiArabia and Russia to step in,
MARKETS NEWS
saying they are working toboost production soon, push-ing oil lower again.
Analysts say that when oilinventories are neither partic-ularly high nor low, price vola-tility tends to diminish.
Oil inventories brimmed af-ter U.S. shale technology un-leashed vast reserves of oil af-ter 2010, and OPEC reacted byturning on its taps in a battlefor market share.
But inventories hit theirlowest in three years inMarch, back in line with theirfive-year average, according tothe Organization for EconomicCooperation and Development.
“The possibility of invento-ries becoming extremely highor low should diminish, whichreduces the likelihood of ex-treme spikes or drops inprice,” said Sebastian Barrack,head of commodities at Chi-cago-based hedge fund Citadel.
Less volatility is good foroil producers and consumers,who find it easier to planahead. But it isn’t so great fortraders and hedge funds.
Lower volatility is puttingpressure on the razor-thinmargins of the giant tradehouses that ship millions ofbarrels of oil around the worldin a high volume.
“We work on margins whichare less than half a percent ofturnover, which means youdon’t have a lot of margin forerror,” said Marco Dunand, chiefexecutive of Switzerland-basedtraderMercuria Energy Group.
Amid such trading condi-tions, hedge funds are bowingout. Oil trader Andy Hall’smain fund at Astenbeck Capi-tal Management LLC closedlast August, while Madava As-set Management led by vet-eran energy trader GeorgeTaylor and Jamison CapitalPartners LP have also shutdown funds. —Jon Sindreu
and Patricia Minczeskicontributed to this article.
BY SARAH MCFARLANE
Shale, OPECCurbOil-Price SwingsSettling DownGlobal oil prices have become less volatile in the past year.Historical volatility of Brent crude-oil futures prices over rolling one-year average
THEWALL STREET JOURNAL.Source: Thomson Reuters
100
0
25
50
75
%
2000 ’10 ’15 ’18’05
Average sinceFeb. 3, 1995
1995
cultural goods, were littlechanged Friday.
Meanwhile, the Stoxx Eu-rope 600 added 1%, paring itsdecline for the week to 1.1%.
Investors' worries about eu-rozone stability appeared toease Friday after two large an-tiestablishment parties in It-aly, the League and the 5 StarMovement, struck a deal on acoalition government, resolv-ing a political crisis but put-ting a euroskeptic administra-tion into power.
The decreased chance offresh elections in Italy—whichcould be seen as a proxy voteon European integration—ap-peared to reassure investorsfor now after a rocky week.
“These developments mightmean that we go back to theslow burning problem of thenew administration’s fiscal ex-pansion plans and rolling backof reforms rather than thisweek’s immediate concernsover a decisive fresh electioncampaign and possible euromembership discussions,” strat-egists at Deutsche Bank wrote.
Stocks in Spain also rose,after lawmakers voted to oustPrime Minister Mariano Rajoy,ushering in a center-left gov-ernment whose new leaderpledged to enact a moderate,pro-European agenda that an-alysts expect to keep its eco-nomic recovery on course.
Earlier, stocks in Hong Kongand Shanghai were mixed asthe long-awaited introductionof Chinese shares into a set ofglobal benchmarks took effect.Global index provider MSCIInc. added around 230 main-land-listed Chinese stocks toits Emerging Markets Indexand other indexes.
Hong Kong’s Hang Sengrose 0.1%, but the ShanghaiComposite fell 0.7% after ris-ing Thursday ahead of the in-clusion in the MSCI indexes.
Volatility in the oil market isbeing squeezed out by two gi-ant forces: U.S. shale and OPEC.
Even threats of war, sanc-tions and an economic crisishaven’t roused the sort of mar-
ket move-ments thatdrive profits
for traders and hedge funds.The volatility of Brent
crude, the internationalbenchmark, has fallen toaround 22%, as measured bythe standard deviation of dailyprice moves over the pastyear. Since 1995, the averagehas been 32%. A lower figureindicates less volatility.
The oil price tends to movearound more when global in-ventories shift between beingvery high, prompting prices tofall because of extra supply,and very low, which pushes upthe price.
Currently, when inventoriesfall, nimble U.S. shale produc-ers respond quickly to pricerises by producing more oil,meaning their tanks don’tempty too much. On the otherside, supply cuts from the Or-ganization of the PetroleumExporting Countries and othermajor producers mean inven-tories don’t rise too high.
“It’s a combination of shalebecoming a bigger force, andthen you have this more cycli-cal story of inventories comingdown helped by OPEC cuts,Venezuela and strong demand,”said Francisco Blanch, head ofcommodities research at Bankof America Merrill Lynch.
An economic crisis hascrimped production in Venezu-ela, one of several geopoliticalfactors that would typicallystir volatility. Tensions arehigh in the Mideast, with Ye-meni rebels targeting SaudiArabian oil facilities and Israelhitting Iranian targets inSyria. The U.S. is reinstating
COMMODITIES
Italian Debt’s Wild Week: First the Selloff, Then the Buyback
MASSIMOPERCOSSI/EPA/SHUTTER
STOCK
Blue ChipsFinishWeekWith aWin
FRIDAY’SMARKETS
League leader and new Interior Minister Matteo Salvini, right, outside the presidential palace with Undersecretary Giancarlo Giorgetti.
.
�
B14 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
perhaps because of a lack of clar-ity over Mr. Marchionne’s succes-sor. If he doesn’t retain some over-sight, the company’s commitmentto the new targets could slip.
Investors were skeptical of am-bitious 2018 targets Mr. Marchio-nne unveiled in 2014. Against ex-pectations, he will likely hit them.That is partly thanks to strong carsales, said Philippe Houchois, anautomotive analyst for Jefferies.
The 2022 plan could be harder.Fiat Chrysler now faces a weaken-ing market in the U.S., on which itis heavily dependent. There is alsothe existential threat of driverlesstaxis, which in urban marketscould make car ownership redun-dant. This, too, explains why Mr.Marchionne is betting on sportscars and iconic SUVs—vehicles lesslikely to be replaced by robotaxis.
Meanwhile, he is supplying Al-phabet’s driverless car unitWaymo so that Fiat Chrysler canprofit from driverless technologyif it ever shows a return. Waymounveiled an order of 62,000 Chrys-ler minivans on Thursday.
Mr. Marchionne is right to betthat upscale brands have the bestchance of surviving. Investors justneed him to back the bet.
Fiat Chrysler CEO Sergio Marchionne has deferred talk of succession until 2019.
DANIELACKER
/BLOOMBE
RGNEW
S
New Fiat Chrysler Bet:Not Chrysler, Not FiatStrategic plan doubles down on luxury and SUV brands
JobsandTradeMakeaBitterBrewforBusinessWage growth, trade tensions bring higher expenses. And
companies will be hard-pressed to raise prices.
Take This Job and Shove ItJob leavers as a share ofunemployed workers
THEWALL STREET JOURNAL.
Source: Labor Department
16
0
2
4
6
8
10
12
14
%
2000 ’101995
panies facing rising labor and ma-terials costs is to raise prices, butthat will be hard. Not only haveAmericans become conditioned tolow prices, but the competitivelandscape has been fundamentallyaltered by players such as Ama-zon.com that are willing to acceptlower profit margins for the sakeof more market share.
Companies are at risk of beingstuck between rising costs and ahard place.
Labor is getting more expensive.Here, a steelworker in Illinois.
LAWRE
NCE
BRYA
NT/RE
UTERS
Fiat Chrysler Automobilescould be re-christened MaseratiJeep or Alfa Romeo Ram.
These are the four brands towhich the Italian-American automaker will direct resources overthe next four years, according to ahotly anticipated strategy unveiledFriday by philosopher-boss SergioMarchionne. He expects them andFiat’s van business to account for80% of revenue in 2022 fromroughly 65% now. Fiat cars, Dodgeand Chrysler will be marginalized.
Since taking Fiat’s wheel in2004, Mr. Marchionne has put re-sources only where there is a sus-tainable return—a novelty in thecar business. These days luxurybrands, SUVs and light trucksmake a return. So do car loans,which explains why Fiat Chrysleris considering setting up an in-house finance arm in the U.S.
A strategic flaw is that Mr. Mar-chionne won’t be around to see itthrough. He insists he will stepdown as CEO next year, thoughhopes remain that he will remainas chairman. On Friday he de-ferred talk of succession until2019. Fiat Chrysler’s shares fell,
BY STEPHEN WILMOT
Low labor costs and tamewholesale prices make companies,and investors, happy. With thejob market heating up and tradetensions escalating, the goodtimes may end quickly.
Friday’s employment report wasstrong all around. The economyadded 223,000 jobs in May—morethan the 190,000 that economistsexpected. The unemployment ratefell to 3.8% from 3.9% a monthearlier. Average hourly earningsare 2.7% higher than a year ago,topping estimates.
Wage growth has been surpris-ingly restrained despite the tightlabor market, but there is risingevidence that will change. Employ-ees are increasingly leaving theirjobs to look for work, which sug-gests they are confident they canget another job at higher pay. Thejobs report showed that 14% of thepeople counted as unemployed hadleft their old jobs voluntarily andcontinued to look for new work.That compared with 11% at thestart of the year, and was thehighest figure since 2000.
Goldman Sachs economists havefound that sharp increases in thenumber of people leaving jobs vol-untarily as a share of the unem-ployed tends to be followed bysharp drops in unemployment.
As labor gets more expensive,the brewing trade war meanscompanies will pay more for sup-plies. The Trump administrationon Thursday levied tariffs onsteel and aluminum imports fromCanada, Mexico and the EuropeanUnion—a move that would raisecosts for car makers and othermanufacturers such as Boeingand Caterpillar.
That followed the White Houseon Tuesday restoring its plan toplace tariffs on industrial importsfrom China, and saying it isweighing additional tariffs.
Countries targeted by the tariffsquickly responded, potentially set-ting off a trade war that raisescosts across global supply chains.
The natural response from com-
BY JUSTIN LAHART
HEARD ONTHESTREET
FINANCIAL ANALYSIS & COMMENTARY
EXCHANGE
What doesn’t kill you makes youstronger.
Two years ago, it looked likeSaudi Arabia was winning its fightagainst the U.S. shale oil industryby furiously pumping crude to drivedown prices. Some drillers wentbust and many more flirted withbankruptcy while oil drilling inplaces like West Texas and NorthDakota collapsed.
The Saudi effort backfired. In-stead of killing shale it spurred awave of innovation that trans-formed U.S. drilling into a highly ef-ficient process, dramatically lower-ing costs and boosting output.During the next oil bust, it will bethe Saudis who have to worry.
“High prices tend to create slop-piness in this industry becausepeople focus only on growth,”says Doug Suttles, chief execu-tive of shale driller Encana.“Downturns make you focus oncost because it’s the only thingyou can control.”
Meanwhile, the U.S., whereproduction was once thoughtto have peaked nearly 50years ago, will become thelargest oil producer on theplanet by next year.
One region alone,the prolificPermian Ba-sin, recentlypassed 3.1million
barrels a day of output. Stretch-ing from West Texas to New Mex-ico, it would now rank No. 4 ofthe 14 members of the Organiza-tion of the Petroleum ExportingCountries and may soon producemore than No. 3, Iran.
The amount of oil being pulledfrom the ground there is alreadydriving global markets. But whatshould really frighten energy min-isters in Riyadh, Tehran and Mos-cow is how that oil is produced.The number of drilling rigs nowactive in the Permian is the sameas back in October 2011, yetthe region is producing threetimes as much crude.
Just a few years ago, awell would be drilledand then the rig
would be disassembled and movedto a new location—a time- and la-bor-intensive process. Today it ismore common for rigs to sit on gi-ant pads, which host multiple wellsand the necessary infrastructure,and for them to move on their ownpower to a new well yards away.These rigs drill over a wider areaand increasingly are being guidedby instruments developed for off-shore drilling that see hundreds offeet into the rock. They inject moresand underground to break openthe rocks, boosting output.
Those small gains add up. Be-tween 2010 and 2016, the averagenumber of drilling days per rig in-cluding transport time fell at a paceof about 8% a year in the Midlandsection of the Permian, while initial
well production grew by 33% in justtwo years, according to McKinseyEnergy Insights.
The efficiency and drilling inten-sity is clear from just one siteowned by Encana. The pad in thePermian started out with 14 wells,recently had 19 more added to itand may reach 60 wells—a once un-imaginable concentration.
That also may make America’sreserves last longer. Encana’s ap-proach, which it calls “the cube,”targets different layers simultane-ously, which can boost the amountthat can be recovered economicallyby about 50%, Mr. Suttles said.
The efficiency gains mean thateven an epic price decline won’thalt activity at the best fields.What’s more: The industrial scale ofU.S. drilling means that companiesable to write big checks and handlecomplex logistics are driving themarket. They are less likely to feeltrue financial distress during thenext pullback.
Producers reckon that the core ofthe Permian is still profit-
able in the high $30-to-mid-$40-a-barrelrange for U.S.benchmark crude,now trading around$66 a barrel. Ac-cording to the Inter-
national MonetaryFund, not a single Middle
Eastern OPEC member can fi-nance its budget at Brent crude
below $40 a barrel.OPEC, a cartel out to maximize its
profit, talks a lot about bringing“balance” to the oil market. The bustits members helped engineer leftthat balancing pointat a price they willfind hard to livewith.
The NewTechThatTerrifies OPEC
U.S. shale oil drilling is becoming so efficientthat it could hurt exporters like Saudi Arabia
BY SPENCER JAKAB
JAMES DURBIN FOR THE WALL STREET JOURNAL
A fracking operation inMidland, Texas. Outputof Permian Basin crudehas tripled since 2011.
April 2018 oil production,million barrels a day
Iran3.823
Iraq4.429
*Five-week average as of April 27Sources: OPEC (OPEC output);EIA (U.S.); Russian Ministry ofEnergy (Russia)
Well onIts Way
Permian Basin3.122 million barrels a day
In April, the PermianBasin accounted for a
third of total U.S. output
U.S.*10.57
Russia10.97 million barrels a day
Hanna Sender/THEWALL STREET JOURNAL.
2010
U.S. oil productionfrom the PermianBasin alone surpassed11 OPEC membersand is nearingIran’s levels
Permian oil production,monthly averagein million barrels a day
Saudi Arabia9.96
0
1
2
3
4
5
6
7
8
9
10
E. Guinea
GabonEcuadorQatarLibya
Algeria
Angola
Nigeria
KuwaitU.A.E.
Venez.
Stock investors are a lotlike fishermen, oftenlamenting “the one that gotaway.” It turns out thattraders should also becasting their lines when thetime is ripe. Doug Ramseyof Leuthold Group, aMinnesotan who keepstrack of such things, notesthat the fish like to bite inthe days surrounding a fullmoon or new moon and notin between.
Since the S&P 500’sinception, the index hasreturned 10% annually but19% in the part of themonth when fishing wasmost auspicious and just4.9% in the least-promisingpart. The effect was evengreater for high-betastocks, at 33% and negative13% for the best and worstperiods, respectively.
By any measure, this isone of the most profitableinvesting strategies around.The problem is, there is noprovable connectionbetween the phases of themoon and stock returns.That has been made clearsince 2015, when therelationship has reversed;returns around full and newmoons have lagged behindthose in between. At leastthe fish are still biting onschedule.
OVERHEARD
KEITHSR
AKO
CIC/ASSOCIAT
EDPR
ESS
.
�
C2 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
children start homework on their own, do thedishes or choose a gift for a friend. While dishesand other chores may just seem like duties, theyare also moves toward independence: Childrenneed these skills, and the sense of mastery theyengender, to become self-sufficient adults. Theseare “practice trials,” Dr. Kazdin says. He suggeststhat when children make these efforts, parents of-fer enthusiastic and specific praise, along with apat on the back or a high-five. Issuing a good-na-tured challenge—“I bet you can’t make your sand-wich all by yourself”—can also make it more likelythat a child will follow through. What doesn’t workis nagging, issuing reprimands or punishing a childfor not being more independent, he says.
Dr. Sachs encourages parents to involve theirchildren in making decisions about their own pathtoward independence. When you ask children whatthey think about, say, staying home by themselvesand then ask them to weigh risks and benefits, “itfacilitates their self awareness,” says Dr. Sachs.“They automatically start to make better decisionsbecause they are thinking rather than just acting.”This will serve them well when they face decisionsabout things with more serious consequences, likesex and alcohol.
It’s also never too early to start encouraging in-dependence, says NYU Langone’s Dr. Berry. Chil-dren as young as 2 or 3 can start helping withchores, such as carrying a plate to the table andputting clothes in the hamper. Most 8-year-oldsshould be able to make scrambled eggs “with somegentle eyes on them,” while most 10-year-olds canhandle a chef’s knife, she says. Parents first needto teach safe techniques, repeatedly, then assistwith and monitor the activity before gradually“fading out.”
Giving children more independence outside ofthe house can be more of a challenge—especiallyif you live in a neighborhood of worrywarts andyou’re the only parent letting your kid bike to thepark alone. That’s why Lenore Skenazy, a formerjournalist and mother of two now-grown sons, istrying to convince entire communities to give theirkids independence with her nonprofit Let Grow. “Ittakes away the stigma of being a daredevil par-ent,” she says.
Ten years ago, Ms. Skenazy started a blog enti-tled “Free Range Kids” after she faced a backlashover a newspaper column she wrote about lettingher 9-year-old son ride the subway home alone inNew York City. Ms. Skenazy says that having anentire community commit to children’s indepen-dence can solve another potential problem, too:A dearth of other unaccompanied kids to playwith. Otherwise, “everyone is in lacrosse or in theafter-school chess club or some other structuredactivity,” she says.
Michael J. Hynes, superintendent of the Patch-ogue-Medford Schools on Long Island in New York,launched a Let Grow project last fall because he wasseeing “kids more and more bubble wrapped as theyears go on,” he says. “I’ve noticed they are averseto risk-taking.”
The children in five of the district’s seven ele-mentary schools now have one day when theironly homework is to do something new. (Someclasses also write about the experience.) Project
suggestions, to do aloneor with a friend, includewalking the dog, exploringthe woods and “playingnight tag.” Let Grow alsohelps schools to launchPlay Clubs in which chil-dren can play freely in theplayground or gym beforeor after school. The or-ganization suggests thatschools enlist one adult toact as a “lifeguard” butotherwise let youngstersalone to figure out whatand how to play—and tosolve their own problems.
After nearly a year ofthe effort, Mr. Hynes says
that he’s seen positive results in the district. “Ican’t say test scores went up, but I believe thekids are better behaved and more self-confident.Students are taking risks in the classroom. Nor-mally shy kids are now raising their hands.”
When Jodi Della Femina Kim felt that herdaughter, then age 10, was ready to get a cell-phone and walk to school without an adult, sheand her husband made the decision jointly withseveral other families in their Brooklyn neighbor-hood. For several weeks, Ms. Della Femina Kimwalked a few steps behind her daughter. Therewere also rules: The phone had to be in the girl’spocket (no texting while walking) and she couldn’twear headphones (too distracting). Next, Ms. DellaFemina Kim walked her daughter to a cornerwhere they would meet the child’s friend. The kidswould walk the rest of the way to school together.After several months, the children were allowed towalk the entire way—about four blocks—withoutan adult.
Her daughter, Annabel Kim, now 15, says that shewas “very excited to get to walk to school myself. Ifelt like it meant you were finally growing up.” Shecontinues to build her own independence bybabysitting her 9-year-old sister and making dinner.
Anne Marie Albano, director of the ColumbiaUniversity Clinic for Anxiety and Related Disordersin New York, reminds parents that the ultimate goalis to have their children be self-sufficient by thetime they leave home for college or the workplace.She and her colleagues have come up with a list ofmilestones that adolescents should achieve beforehigh-school graduation, including being able to ad-vocate for themselves with teachers and other au-thority figures, seeing a doctor without a parentand waking themselves up in the morning on theirown. “We have parents who call their college stu-dent at Harvard or Michigan and wake them up ev-ery morning,” she says. You do not want to be thatparent.
Even when children are thrilled to gain some in-dependence, parents often have to learn to copewith their own anxiety. Heidi Thompson, lives withher husband and two children in Calais, Vt., a townwhere children often run around unsupervised.Still, Ms. Thompson, a psychotherapist, was ner-vous when her daughter wanted to participate ina ritual for neighborhood kids the summer beforeseventh grade: camping overnight without adultson an island in the nearby lake. Ms. Thompson re-luctantly gave her OK. “I was up all night,” shesaid. In the morning, however, her daughter, “camehome so excited. We want them to feel that theworld overall is a safe place,” says Ms. Thompson.
Of course, when children try something on theirown, it doesn’t always go smoothly. They may takethe wrong bus or choose not to study for a test—and then bomb it.
Such outcomes point to the one autonomymilestone that parents find particularly difficult,says Joseph F. Hagan Jr., clinical professor in pe-diatrics at the University of Vermont and the co-editor of the American Academy of Pediatrics’Bright Futures guidelines for health professionals.“Part of independence is to make your own deci-sions,” he says—including “the right to make awrong decision.”
� A Let Grow ‘kidcard’ is meant tobe carried bychildren out ontheir own, to calmthe fears ofconcerned adults.
A big 2007 study, published in Clinical Psychol-ogy Review, surveyed the scientific literature onhow much parenting influences the developmentof anxiety in kids. The parenting behavior thathad the strongest impact of any kind was “grant-ing autonomy”—defined as “parental encourage-ment of children’s opinions and choices, acknowl-edgment of children’s independent perspectiveson issues, and solicitation of children’s input ondecisions and solutions of problems.” More auton-omy was associated with less childhood anxiety.(Genes play an even bigger role, however, in indi-vidual differences in anxiety.)
For children who are already anxious, overpro-tecting them can make it worse. “It reinforces to thechild that there is something they should be scaredof and the world is a dangerous place and ‘I can’t dothat for myself,’ ” says Rebecca Rialon Berry, a clini-cal psychologist at the NYU Langone Child StudyCenter.
A lack of autonomy and independence can alsostymie the development of self-confidence and maycause children to remain dependent on parents andothers to make decisions for them when they be-come adults, says Jack Levine, a developmental pe-diatrician in New York. And because children natu-rally want more independence as they grow,thwarting that desire can cause them to become an-gry and act out, notes Brad Sachs, a family psychol-ogist in Columbia, Md.
Like a lot of Generation Xers, I have my ownmemories of a carefree childhood riding bicyclesand playing tag with other neighborhood children,my parents nowhere in sight. They seemed to trusttheir instincts. But today, how do you go with yourgut when you’re bombarded by hyperventilatingsocial media posts, shrill parenting advice booksand a neurotic cultural tide? And what about dis-approving neighbors—and spouses? My own hus-band wasn’t thrilled when I told him that I’d leftour daughter home alone. “She could have hit herhead. Or choked,” he said. (To be fair to him, boththings have actually happened to her—and this iswhen we’ve been around.)
A handful of states have laws that specify mini-mum ages when it is legal, typically, for children tobe left home alone. In Maryland, for example, it is8; in Illinois, children under 14 can’t be left alonefor a vague “unreasonable” amount of time. Otherstates give more general guidelines. But for manybig independence milestones—such as taking pub-lic transportation alone or caring for younger sib-lings—there are few hard age recommendations.
“Children mature and develop skills at differentrates,” says Phyllis F. Agran, a pediatric gastroen-terologist in Irvine, Calif., and the co-author ofseveral of the American Academy of Pediatrics’ in-jury prevention policies. She notes that childrenwith special needs, such as those with ADHD ordevelopmental delays, may take longer to developthe impulse control and skills necessary to dosome things independently.
Many financially struggling families may have nochoice but to leave their children home alone whilethey work. And in high-crime neighborhoods, it maynot be safe to send even older children out to play.
One independence milestone that has been stud-ied extensively is crossing the street. Research hasfound that young children walking to school oftendon’t look for traffic or stop at the curb beforestepping into the street. Some studies have foundthat parents are likely to overestimate their chil-dren’s ability to safely cross the street. A paperpublished in 2000 in the British Journal of Educa-tional Psychology found that, in general, 10- and11-year-old children were much better than 7- and8-year-olds at identifying safe places to cross andat detecting traffic and road dangers. The Ameri-can Academy of Pediatrics advises parents to waituntil age 10 to allow children to walk to school, oranywhere else, without an adult.
Alan E. Kazdin, a professor emeritus of psychol-ogy and child psychiatry at Yale University, recom-mends that parents repeatedly encourage indepen-dence in small, lower-stakes situations, like having
ContinuedfrompageC1
FROM
TOP:LETGRO
W;ISTOCK
(3)
WORD ONTHE STREET
BENZIMMER
THERE’S A facetious saying inlegal circles about the easewith which prosecutors can se-cure indictments in grand jurycases: You can get a grand juryto “indict a ham sandwich.”
That saying is back in thenews, thanks to Special Counsel
Robert Mueller’s Russia probe.Two weeks ago, Fox News’sJudson Berger paraphrased astatement from President Don-ald Trump’s personal lawyer,Rudy Giuliani, by saying, “Youcan indict a ham sandwich, but
Wolfe, a classmate of the judgeat Washington and Lee Univer-sity, credited him with the“ham sandwich” line in “TheBonfire of the Vanities.”
But recent research has re-vealed that Mr. Wa-chtler’s quip to theDaily News wasn’tthe first time the ex-pression appeared inprint. Word re-
searcher Barry Popik foundthe line attributed to ThomasPuccio, a Justice Departmentattorney who was a lead pros-ecutor in the Abscam federalcorruption case. In February1982, Washington Post colum-
nist Jack Anderson quotedPuccio: “‘I could,’ he boastedin front of witnesses, ‘indict aham sandwich.’” When Puccioleft for the private sector afew months later, the DailyNews reported that his for-mer boss at the Justice De-partment, David Margolis,averred that Puccio could in-deed get that proverbial ham-sandwich indictment.
Further digging into digitizednewspaper databases reveals aneven earlier use. In a September1979 article in the Democratand Chronicle of Rochester, N.Y.,an unnamed local defense law-yer is quoted as saying, “The
A DeliStandbyRemains onthe Menufor Judges,Prosecutors
not a sitting president.” And onCNN, former Trump politicaladviser Roger Stone elicited achuckle from host Chris Cuomowhen he suggested that bybringing charges against a Rus-sian catering company withlinks to Russian President Vladi-mir Putin, “Mr. Mueller has, in-deed, indicted a ham sandwich.”
The legal aphorism has longbeen attributed to Sol Wachtler,former chief judge of NewYork’s Court of Appeals, basedon a piece that appeared in theNew York Daily News in Janu-ary 1985. Mr. Wachtler told thepaper that the state shouldscrap the grand jury system forbringing criminal indictments.The piece summarized his view,with brief quotes: “district at-
torneys now have so much in-fluence on grand juries that ‘byand large’ they could get themto ‘indict a ham sandwich.’”
Mr. Wachtler became evenmore firmly linked to the say-ing two years later, when Tom
[ Indict a Ham Sandwich ]
AGE 14 TO 17� Schedule and go to adoctor’s appointmentwithout help.
� Get an after-schoolor summer job.
�Make and follow abudget.
� Take an out-of-towntrip alone.
AGE 6 TO 7�Make a sandwich.
� Take a bathunsupervised.
AGE 2 TO 3� Put dirty clothes inthe hamper.
� Put toys away.
Children LeftTo Themselves
REVIEW
A PATH TOWARDINDEPENDENCE
district attorney could get agrand jury to indict a hamsandwich if he wanted to.”
I reached Mr. Wachtler, now88, and told him about theseearly examples. He surmisedthat the Rochester lawyer wasechoing public statements thatMr. Wachtler himself madeabout the grand jury system in1972 when he campaignedstatewide for the Court of Ap-peals judgeship (then anelected position). “That wasthe language I used,” he toldme, adding that Puccio, who hesays he knew well, likely alsogot the expression from him.
Regardless of who exactlyused it first, Mr. Wachtler isthe one who has received thecredit over the years, for betteror worse. He himself would getindicted in 1992 for harassinghis former girlfriend, spendingnearly a year in prison afterbeing convicted. As he wrote inhis prison memoir, “After theMadness,” “It seemed some-what perverse that after myhaving had some twelve hun-dred opinions and over onehundred articles published,part of my legal legacy wouldrelate to a ham sandwich.” RU
THGWILY
Sources: Rebecca Rialon Berry, AnneMarie Albano, American Academy ofPediatrics, familyeducation.com
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C3
REVIEW
Kim has overseen the evolution of a new socio-economicclass in North Korea, known locally as the donju, or moneymasters. They are denizens of Pyongyang and other largecities who are focused on making lucrative deals and at-taining personal wealth—but who also pay lip service tothe doctrines of North Korea’s ostensibly state-run econ-omy, which has been crumbling for decades. As one of myguides once gushed to me, “Our style of socialism isunique in the world.”
As a novelist and art critic, I was drawn to North Koreaafter exploring the contemporary art scene in neighboringChina, lured by the chance to explore an isolated societywhere everyday life is shrouded in propaganda. EventuallyI enrolled in language courses at Kim Hyong Jik Universityin Pyongyang—the only American taking advantage of aprogram offered to Westerners for the first time.
My studies enabled me to spend weeks in the “capitalof the revolution,” as it has been deemed by the govern-ment, and to get to know a handful of North Koreans there.Though none of my guides ever criticized the governmentdirectly, during my later visits they felt no need to hidetheir love of luxury brands, personal wealth and businessdeals with foreigners. That was certainly not the case backin 2012.
The capitalist roots of the donjuwere established in thefamine years of the 1990s. A series of natural and policydisasters, along with the collapse of the country’s then-chief benefactor, the Soviet Union, sent the North Koreaneconomy into free fall. The public food distribution systemceased functioning for all but the elites in Pyongyang. Un-
A Consumer Class WieldsNew Power in North KoreaKim Jong Un spurred the upwardly mobile ‘money masters’ to seek foreign deals
to boost the economy. Now they want him to make a foreign deal, too
til then, the populace had relied onthese essential rations as a means ofsustenance, because “official salariesare meaningless and are scarcelymore than token payments,” accord-ing to Seoul-based North Koreanstudies professor Andrei Lankov. Tosurvive, North Koreans had to gointo business for themselves. Trad-ers began crossing what at the timewas a very porous border into Chinaand bringing back goods to sell. Itwas a brutal lesson in free-marketeconomics: Do or die.
The widespread opening of jang-madang, as the black markets areknown, eventually lifted the countryout of the famine, and the new out-lets never went away. The state peri-odically attempted to intervene un-der the reign of Mr. Kim’s father,Kim Jong Il, by shutting marketsdown, regulating prices or initiatingcurrency reforms that decimatedprivate wealth. Yet the unofficialeconomy took over as the officialone failed to recover: The Seoul-based website Daily NK estimatedfrom the reports of defectors that,by 2008, over two-thirds of NorthKorean employment was in the blackmarket. In a 2015 survey of defectorsby a Seoul University professor, overhalf said those markets had beentheir main source of food.
The smaller and more elite donjuclass is made up of individuals whohave been assigned to (or have
bought their way into) the most prestigious jobs in the of-ficial state economy—where they enjoy an unofficial li-cense to go into business for themselves. Under Kim JongUn, it is increasingly easy for them to travel abroad to cutdeals, and they have engineered any number of covertways of violating sanctions. “If you have money, you canbuy anything you want in North Korea nowadays,” one re-cent defector told me in South Korea.
In 2016, one of my North Korean guides, a donju,pitched me: Perhaps I knew some businessmen in Berlin,where I live, who might be of a riskier disposition and will-ing to covertly violate the sanctions. (For the record, Ididn’t.) “We can do virtually anything,” the guide asserted.“I know some guys who are IT programming geniuses. Butit doesn’t have to be computers. We can sell hair for wigs,for instance. Artwork—sure, we can provide. More thananything, we need foreign partners.”
My last visit to Pyongyang was just over a year ago, be-fore the U.S. travel ban was imposed. One afternoon in myhotel room, I saw on the international news that the Northhad just fired a short-range ballistic missile into the Seaof Japan. That night, I had dinner with two donjuworkingin tourism, to whom I broke the news, since it had not yetbeen on state media. Their reaction was not the ecstaticjubilation with which North Koreans are supposed to greetsuch events.
“What was the reaction of the Western media?” theyasked with concern. I told them the truth: “Commentatorssuggest that more sanctions are on the way.” My compan-ions looked down into their bowls of cold noodles, and asomber atmosphere permeated the rest of the dinner. Themessage, though unspoken, was clear: All this saber-rat-tling is bad for business.
My experiences in North Korea have taught me that thedonju are the closest thing North Korea has to a dissidentclass. They are savvy and worldly and certainly don’t con-form to the outside world’s image of the brainwashed KimJong Un fanatic; they don’t buy into the state’s propa-ganda. As for Mr. Kim, in April he declared that the coun-try had met its nuclear goals and would now make eco-nomic development the top priority. In seeking a deal withSouth Korea and the U.S., Mr. Kim has perhaps joined theranks of the donju himself.
Mr. Jeppesen’s new memoir is “See You Again in Pyong-yang,” published by Hachette Books.
(Astrophysics and neuroscienceare the other two.) It also comeswith an impressive record: Six pre-vious Kavli winners have gone onto win the Nobel Prize.
“It’s like having a mantle,” saysHarriet Zuckerman, professoremeritus of sociology at ColumbiaUniversity, who has written aboutthe proliferation of science prizes.“Once you win one prize, you arein line to win others.”
The Norwegian Academy’schoice of Crispr scientists thisyear brings it into a contested, andoften contentious, arena. Crispr(which stands for clustered regu-larly interspaced short palin-dromic repeats) serves as the im-mune system of bacteria and hasbeen the subject of study by re-searchers for decades. In 2012, agroup of scientists led by Dr. Char-pentier, then at the University ofVienna, and Dr. Doudna of the Uni-versity of California, Berkeley—and a few months later, a groupled by Dr. Siksnys of Vilnius Uni-versity in Lithuania—published pa-pers reporting that Crispr and theCas9 enzyme it produces could beadapted as a tool to edit DNA inplants, animals and humans.
The Broad Institute of MIT andHarvard’s Feng Zhang, working witha team of scientists, showed in 2013how to use Crispr in this way. Drs.Charpentier and Doudna and theirinstitutions also claim the inven-tion, but the Broad holds the patentin the U.S. The Berkeley group has
SciencePrizes AddIntrigue toThe RaceFor theNobel
Breakthrough Prize in Life Sciences(a hefty $3 million prize), and otherawards that are considered harbin-gers of a possible Nobel.
Some observers say the Kavli so-lidifies the status of Drs. Charpen-tier and Doudna as leading candi-dates for a Crispr-related Nobel.Since the Nobel is granted to amaximum of three people for eachcategory, that leaves one open spot.
Jacob Sherkow, a visiting scholarat Stanford Law School who closelyfollows Crispr, believes that theKavli bolsters Dr. Siksnys’s claim forthe third spot. In his opinion, hesays, “these scientists were the firstto understand this system could beengineered as a genome-editing toolwith ease and flexibility and preci-sion that could not have beenachieved previously. I think that iswhat the Nobel will be for.”
Still, David Pendlebury, an ana-
DURING MY FIRST visit to North Korea, inApril 2012, my tour group’s North Koreanguides suddenly stopped in their tracks atthe door of a seafood restaurant one eve-ning. We all joined the restaurant staff
and diners, drawn to the glow of a plasma TV that hadbeen hastily positioned on two wobbly dining tables bythe entrance. There on the screen, giving his first publicspeech, was the country’s new leader, Kim Jong Un,about whom the outside world knew little and mostNorth Koreans knew even less.
After 10 minutes spent acknowledging his paternal pre-decessors and the military, with frequent interruptions forapplause, the young Mr. Kim made a surprising pro-nouncement about the country’s priorities: He officially el-evated economic development to an equal status with itsnuclear weapons program. He promised that his peoplewould “not tighten their belts again” and would “enjoy thewealth and prosperity of socialism as much as they like.”Western economic sanctions tied to the nuclear effort hadput these dual aims in direct conflict, so Mr. Kim’s pledgecreated expectations and pressures within North Korea:Would he be able to strike a deal with the West?
In four subsequent trips since 2012, I have seen an in-creasing display of wealth on the streets of Pyongyang—Hermes handbags, Rolex watches, faces powdered inFrench cosmetics—and fewer tell-tale signs of poverty. Mr.
BY TRAVIS JEPPESEN
THESE DAYS, high-profile prizes inscience seem to be everywhere. Theprizes usually bring glitzy awardceremonies, lucrative purses and amodicum of public acclaim.
More tellingly, they also producebuzz about who might be in line towin science’s most coveted award,the Nobel Prize. That’s why the an-nouncement on Thursday that theprestigious 2018 Kavli Prize innanoscience is going to EmmanuelleCharpentier, Jennifer A. Doudnaand Virginijus Siksnys for helpingdiscover the Crispr-Cas9 gene-edit-ing tool is likely to make a splash.
The award comes with a trip inSeptember to the Norwegian Acad-emy of Science and Letters in Osloto receive a gold medal and $1 mil-lion cash in each of three fields.
BY AMY DOCKSER MARCUS
WONGMAY
E-E/ASSOCIAT
EDPR
ESS
�Cashiers bagitems at thePotonggangdepartmentstore inPyongyang,stocked withforeign goods.
filed an appeal in federal court,with a ruling expected this year.
Whatever the outcome of thepatent dispute, scientific awards of-
ten reflect howthe scientificcommunityviews a discov-ery. Dr. Zhanghas fared well,winning a num-ber of presti-gious prizes asone of a group ofother scientists,
including Drs. Charpentier andDoudna. Dr. Zhang was the solewinner of the $500,000 Lemelson-MIT Prize last year.
But on the prize front, Drs. Char-pentier and Doudna appear to be inthe lead. The two have also won the2017 Japan Prize (which earnedthem $420,000 each), the 2015
�JenniferDoudna, left,was a winnerof the KavliPrize; FengZhang was not.
“Blackmarketslifted thecountryout offamineandneverwentaway.
lyst with Clarivate Analytics, saysthat other prizes don’t always tellthe full story in predicting the No-bel. Since 2002, Clarivate hasnamed 300 “Citation Laureates”—scientists whose work is Nobel-worthy and whose papers repre-sent major advances that areregularly cited by their peers. Thecompany has a good record withprediction: 46 of the Citation Lau-reates have gone on to win a No-bel. In the field of Crispr, four sci-entists have received the CitationLaureate: Drs. Charpentier, Doudnaand Zhang, and George Church, aprofessor of genetics at HarvardMedical School. Dr. Church’s teampublished a 2013 paper demon-strating the use of Crispr to editgenes in human cells.
Prizes like the Kavli, firstawarded in 2008, get started partlyin recognition of the limits of theNobel. There are more worthy sci-entists than could ever possiblywin, and some fields are so newthat they aren’t eligible for theprize at all. The newer prizes alsoreflect the scientific community’seffort to engage the public more.
Cori Bargmann, a scientist at theRockefeller University and winner ofa Kavli, compares the prizes to anOscar that leads people to see amovie they might have missed. Asshe puts it, “A prize for Crispr saysthere is something really good outthere, and people who are not scien-tists should learn about this becauseit could affect them, and very soon.” FR
OM
LEFT:A
LEXA
NDER
HEINL/DPA
/ZUMAPR
ESS;
SUSA
NWALSH/ASSOCIAT
EDPR
ESS
.
�
C4 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
REVIEW
himself with an unsavory batch ofcabinet secretaries and advisorswho gleefully enriched themselvesand their corporate allies at publicexpense. His presidency has becomesynonymous with the Teapot Domescandals, which involved his secre-tary of the interior accepting bribesfrom oil companies for sweetheartleasing deals on federal land in Wyo-ming. The secretary went to prison.
Collecting her payments, CarriePhillips kept her silence and her dis-tance from the White House, butHarding invited Nan Britton in forfrequent romps in an Oval Officecloset, as she described their liaison.
Harding did not complete histerm, dying of a heart attack in 1923.Though his administration’s corrup-tion scandals were well reported,nothing of his sexual shenanigansand hush payments was revealed atthe time, though there were insis-tent rumors whispered among thepress corps. It was a time when thepersonal affairs of candidates werenot considered fair game in quitethe same way as they are today, andmass media didn’t exist quite yet.
How did the Harding secrets andpayments finally emerge? AfterHarding died, Nan Britton lost thechild support payments that he hadpromised and, desperate for income,wrote an X-rated memoir of their re-lationship. The book was a best-seller, but Harding’s friends and theRepublican establishment de-nounced it as fiction and attackedBritton viciously, calling her a de-generate home-wrecker. She with-drew from public view but until herdeath in 1991 maintained that herstory was true. In 2015, genetic test-ing proved her right: Warren Hard-ing was the father of her daughter.
Meanwhile, in 1964, a shoe-boxfilled with 250 of Warren Harding’slove letters to Carrie Phillips wasdiscovered in a locked closet of herhome in Marion, Ohio, according tonews reports. The letters were givento the Ohio Historical Society butput under lock for another 50 years.In 2014, the Library of Congress re-leased digital copies of Harding’spurple-prosed testimonials to hislover’s charms; they are availableonline for all to see.
“It may prove to be the mosttalked about secret payment inAmerican political history” declaresone recent newspaper column, re-ferring to the current hubbub sur-rounding news of hush paymentsmade by candidate Trump’s fixers tothe actress known as Stormy Dan-iels. But that distinction might havebelonged to Warren Harding’s dol-lars-for-silence scheme—if only thepublic had known at the time.
Ms. Weiss’s latest book, “TheWoman’s Hour: The Great Fight toWin the Vote,” was published inMarch by Viking.
Page-TurnersFor a PhysicsSummerWHEN I WAS growing up,my father offered me adeal that changed my life.From time to time he’ddrive the family to a big
bookstore a few miles from our apart-ment. I could buy any book I wanted us-ing my (very limited) allowance, buthe’d chip in half, or sometimes thewhole price, for books he approved of.This made a big impression on me, be-cause in general my father didn’t like tospend money—and I didn’t use up myallowance lightly. The store carried afull line of books published by DoverPress, including a lot of reprints of sci-entific classics. My father generally ap-proved of those, and I took advantage.
In one of those subsidized books, Ifound an inspiring role model. NielsHenrik Abel (1802-1829) did not livelong, but he left a lasting legacy inmath. I took the following passage toheart, and it has stuck with me: “It ap-pears that if one wants to make prog-ress in mathematics one should studythe masters and not the pupils.” It’sgood advice for physics, too, and forother fields. (Darwin, when he’s not go-ing on about barnacles, is a great read.)
There’s nothing quite like the experi-ence of interacting with great minds attheir best. Apart from the technicalcontent, they teach you how to thinkand how to express yourself. Let memention a few examples, which you cantake as summer reading suggestions.
There’s still no better introduction tospecial and general relativity than Ein-stein’s original papers. These are re-printed, in translation, in Dover’s “ThePrinciple of Relativity,” which also con-tains the remarkable lecture by Her-mann Minkowski, a teacher of Ein-stein’s, in which he introduced themodern concept of space-time. For as-piring students of general relativity,Einstein’s paper, short by modern stan-dards, provides a clearer yet more pro-found introduction than modern text-books a hundred times its length.
The early part of each of these worksis deeply conceptual and broadly acces-sible. In those halcyon days, people tookthe trouble to explain why they weredoing what they were doing.
Similarly, the best place to start withquantum theory is the early part of PaulDirac’s “Principles of Quantum Mechan-ics.” Legend has it that when he lec-tured on quantum theory at Cambridge,Dirac recited long passages from mem-ory. Once a student asked, “ProfessorDirac, your explanation is very similarto what you wrote in your book, and Istill don’t understand it. Can you ex-plain it in a different way?” Diracthought this over and replied, “Youknow, when I wrote that book, I thoughtvery hard about everything I wrote init. There are no clearer explanations.”
For a popular introduction to phys-ics it’s hard to beat Richard Feynman’s“Character of Physical Law.” As withthe other masterworks I’ve mentioned,and the music of Mozart, the surfacesimplicity emerges from hidden depths.My own initiation into physics camethrough “The Feynman Lectures onPhysics.” These are meant for aspiringprofessionals, but the early chapters ineach volume and the early parts ofmost chapters are relatively easy andnonmathematical.
Recently I had a rewarding experi-ence rereading another Dover book by amaster: “An Introduction to InformationTheory,” by John Pierce. Together withClaude Shannon’s original papers, it’sthe best introduction to that subject.(Pierce prepares you for Shannon.) It’san old book by now, but that adds tothe interest. It’s fun to find that manyrecent developments in artificial intelli-gence were anticipated and that someapparently promising directions havenot been pursued—yet.
Let me close with a striking insightfrom Pierce about the human condition:“We will never again understand natureas well as Greek philosophers did. Ageneral explanation of common phe-nomena in terms of a few all-embracingprinciples no longer satisfies us. Weknow too much.”
Eating directly from the Tree ofKnowledge can reduce one’s taste forlesser stuff. Still, I recommend it.
BY ELAINE WEISS
ILLUSTRA
TIONBY
TOMASZ
WALENTA
;PHOTO
:LIBRA
RYOFCO
NGRE
SS
FROM
TOP:EV
ERETTCO
LLECTION;LIBRA
RYOFCO
NGRE
SS;THEGRA
NGER
COLLECTION;B
ETTM
ANNARC
HIVE/GETTY
IMAGES
WILCZEK’S UNIVERSE
FRANK WILCZEK
Phillips and herhusband werepaid $25,000to leave thecountry andkeep silent.
Nan Britton(left) unveiledher ‘presidentialdaughter’ in amemoir afterHarding’s death.
THE REPUBLICANpresidential candi-date had a prob-lem: a looming sexscandal that could
derail his White House campaign.One of his mistresses was black-mailing him, threatening to tell allabout their extra-marital affair.She was going to sell her story—with documentary evidence—to thepress. Something had to be done.
A team of political fixers was dis-patched to negotiate a hush-moneyagreement with the mistress, and they succeeded:She kept mum. The candidate won the electionand, with the help of millions of women voters,rode to victory under the campaign slogan “Amer-ica First.”
The president paying his way out of trouble isnot the one you’re probably thinking of: It wasWarren G. Harding, winner of the White House inthe 1920 election. But there are remarkable paral-lels to today’s unfolding revelations about presi-dential fixers and payments to talkative formersex partners.
Harding had a “woman problem” that neededto disappear. Actually, there were several Hardingaffairs to keep under wraps during the campaign.The assiduous application of money, intimidationand non-disclosure contracts kept the candidate’stroublesome lovers squelched.
Harding was the bland—but randy—Ohio Sena-tor who became the surprise compromise candi-date of a deadlocked Republican convention in thesummer of 1920. In the days before party primarycontests, he was the empty suit chosen by partyhonchos in the famous “smoke-filled rooms” of theBlackstone Hotel in Chicago. Harding was a weak-willed and pliable bloviator—the perfect candidatefor a weary nation’s “return to normalcy” (Hard-ing’s other campaign slogan) ushering in a newera of corporate avarice.
Harding had been a small-town newspaper pub-lisher and parlayed his civic boosterism into a suc-cessful political career; his wife Florence was thebrains and ambition in the family. With her help,Warren progressed from the local Kiwanis to theOhio statehouse to the U.S. Senate, where he waf-fled on issues, skipped tough votes and made littleimpression—but few enemies, according to Hard-ing biographer John Dean.
All through his political ascent, for more thana decade, he’d been carrying on with a familyfriend and neighbor, Carrie Fulton Phillips, wife ofa prominent department store owner in Marion,Ohio. When they were apart, the pair exchangedsteamy love letters, and Warren’s florid odes totheir erotic exploits became the ammunition thatCarrie was aiming at his presidential ambitions.
Warren had long promised to leave Florenceand marry Carrie, but by early 1920, when Hard-ing’s name began to pop up in chatter about a pos-sible presidential race, Carrie realized that onceher lover threw his hat in the ring, divorce and re-marriage would be out of the question, accordingto historian David Pietrusza’s account of the presi-dential race.
Even more aggravating, Carrie had discoveredthat Warren was two-timing her, indulging in anaffair with a woman less than half his age. As ateenager, Nan Britton had developed an inexplica-ble crush on Harding, who took her as his “bride”in a seedy New York City hotel room when she
was 20 years old,as she wrote in her memoir. Whenthe Republican convention gatheredin June 1920, their 9-month-oldbaby daughter was tucked safelyaway in a Chicago apartment.
Back in Marion, Carrie Phillipswas not coy about her intentions:She demanded money from Hardingor else she would out him as a phi-landerer. On a sheet of U.S. Senatestationery now kept in the Libraryof Congress, he pleaded with her: “Ican pay with life or reputation, butI can’t command such a sum.”
But if she kept quiet and he wonthe White House, he tried to per-suade her, he would be in a betterposition to meet her demands: “Ifyou think I can be more helpful byhaving a public position and influ-ence...I will pay you $5,000 per year,in March each year, so long as I amin that public service.”
No deal, said Carrie. Finally,with his presidential campaignabout to launch, Harding had tofess-up to the Republican NationalCommittee about his predicament.RNC Chairman Will Hays was furi-ous but had to quickly defuse thesituation. He met with Carrie Phil-lips in Ohio to propose a generousfinancial arrangement, accordingto Mr. Pietrusza’s account.
Days later, Carrie’s husband(she’d told him everything) wasbrought to Washington to meet withHarding campaign officials. Theystruck a bargain: The Phillipseswould be paid $25,000 (equivalentto more than $300,000 today) totravel to the other side of theworld—Japan, China, Korea—re-maining out of sight and out ofreach of the press. They would alsoreceive a $2,000 monthly stipend(about $25,000 today) to keep theirsilence for as long as necessary.
How the money was raised is notknown, but by the time Hardingkicked off his campaign in mid-July1920, the Phillipses were far awayand would not return until Hardingwas safely ensconced in the WhiteHouse. Nan Britton was also beingpaid to hush herself and her baby.Knowing nothing of Harding’s sex-ual escapades, American women—newly enfranchised by the 19thAmendment—helped to give him alandslide victory.
As president, Harding surrounded
PresidentialHush Money,Circa 1920
WarrenHarding got
elected partlyby womenexercising
voting rights forthe first time.They didn’t
know about theaffair that hisparty paid tocover up—or about a
second mistress
�One of 240items ofcorrespondencebetweenHarding and hismistress CarriePhillips, allunsealed in2014.
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C5
REVIEW
The Gym, forBody and Soul
GOING TO the gymtakes on a specialurgency at this timeof year, as we pre-pare to put our bod-
ies on display at the pool andbeach. Though the desire to live avirtuous life of fitness no doubtplays its part, vanity and bodyenvy are, I suspect, the main moti-vation for our seasonal exertions.
The ancient Greeks, who in-vented gyms (the Greek gymnasionmeans “school for naked exercise”),were also body-conscious, but theysaw a deeper point to the sweat.No mere muscle shops, Greek gym-nasia were state-sponsored institu-tions aimed at training young mento embody, literally, the highestideals of Greek virtue. In Plato’s“The Republic,” Socrates says thatthe two branches of physical andacademic education “seem to havebeen given by some god to men…toensure a proper harmony betweenenergy and initiative on the onehand and reason on the other bytuning each to the right pitch.”
Physical competition, culminat-ing in the Olympics, was a form ofpatriotic activity, and young menwent to the gym to socialize, batheand learn to think. Aristotlefounded his school of philosophy inthe Lyceum, in a gymnasium thatincluded physical training.
The Greek concept fell out of fa-vor in the West with the rise ofChristianity. The abbot St. Bernardof Clairvaux (1090–1153), who ad-vised five popes, wrote, “The spiritflourishes more strongly…in an in-firm and weak body,” neatly sum-ming up the medieval ambivalencetoward physicality.
Many centuries later, an eccen-tric German educator namedFriedrich Jahn (1778-1852) played akey role in the gym’s revival. Con-vinced that Prussia’s defeat by Na-poleon was due to his compatriots’descent into physical and moralweakness, Jahn decided that aGreek-style gym would “preserveyoung people from laxity and…pre-pare them to fight for the father-land.” In 1811, he opened a gym inBerlin for military-style physicaltraining (not to be confused withthe older German usage of theterm gymnasium for the most ad-vanced level of secondary schools).
By the mid-19th century, Eu-rope’s upper-middle classes hadsufficient wealth and leisure timeto devote themselves to exercisefor exercise’s sake. Hippolyte Triatopened two of the first truly com-mercial gyms in Brussels and Parisin the late 1840s. A retired circusstrongman, he capitalized on hisphysique to sell his “look.”
But broader spiritual ideas stillinfluenced the spread of physicalfitness. The 19th-century move-ment Muscular Christianity soughtto transform the working classesinto healthy, patriotic Christians.One offshoot, the Young Men’sChristian Association, became fa-mous for its low-cost gyms.
By the mid-20th century, Ameri-cans were using their gyms for twodifferent sets of purposes. Thosedevoted to “manliness” worked outat places like Gold’s Gym andaimed to wow others with theirphysiques. The other group,“health and fitness” advocates, ex-panded sharply after Jack LaLanne,who founded his first gym in 1936,turned a healthy lifestyle into a sal-able commodity. A few decadeslater, Jazzercise, aerobics, discoand spandex made the gym a liber-ating, fashionable and sexy place.
More than 57 million Americansbelong to a health club today, butuntil local libraries start addingspinning classes and CrossFit, thegym will remain a shadow of theoriginal Greek ideal. We prize oursound bodies, but we aren’t nearlyas devoted to developing soundmind and character.
“Even thebest AIprogramsdon’tinterpretthe worldthe wayhumansdo.
THOMASFUCH
S
PRITZK
ERMILITARY
MUSEUM
&LIBR
ARY
(2)
HISTORICALLY SPEAKING
AMANDA FOREMAN
The Art of WarONE HUNDRED YEARS AGO, on May 28, the U.S. won its firstvictory in World War I, in the German-occupied French village ofCantigny. A new book published by the Pritzker Military Museum& Library, “Lest We Forget: The Great War” ($60), commemo-rates that moment and other events of the war years with nearly350 prints, photographs and maps. (An accompanying exhibit isrunning at the museum in Chicago through mid-2019.) Thoughthe U.S. declared war against Germany in 1917, it lacked the funds
and resources to fully enterthe war. Posters were away to sway public opinionand to raise money. The1918 print at left encour-aged women to knit for thetroops. The 1919 poster atfar left, of a bandaged butvictorious American carry-ing German helmets, aimedto convince citizens to buybonds to help pay for thewar. The posters “definitelyhelped build a patriotic fer-vor and really got people tothink about the U.S. as aforce in the world,” saysKat Latham, the Pritzker’sdirector of collections man-agement.
—Alexandra Wolfe
Why WeFind Self-Driving CarsSo ScaryTake note, Elon Musk: Even if autonomouscars are safer overall, the public will acceptthem only when they fail in predictable ways
TESLA CEO ElonMusk recentlytook the pressto task, de-crying the
“holier-than-thou hy-pocrisy of big mediacompanies who layclaim to the truth, butpublish only enough tosugarcoat the lie.” That,he said, is “why thepublic no longer re-spects them.”
Mr. Musk’s frus-tration is fueled inpart by widespreadmedia attention toaccidents involvingTesla’s self-driving“autopilot” feature. Onthe company’s most re-cent earnings call, he saidthat “there’s over one mil-lion…automotive deaths peryear. And how many do youread about? Basically, noneof them…but, if it’s an au-tonomous situation, it’sheadline news…. So theywrite inflammatory head-lines that are fundamentallymisleading to the readers. It’sreally outrageous.”
But not all accidents are created equal. Whilemost experts on the subject (including me) agreewith Mr. Musk that autonomous vehicles can dra-matically reduce auto-related deaths overall, hiscriticism of the press betrays a misunderstandingabout human nature and the perception of risk:Even if self-driving cars are safer overall, howand when they fail matters a lot.
If their mistakes mimic human errors—such asfailing to negotiate a curve in a driving rain stormor neglecting to notice a motorcycle approachingfrom behind when changing lanes—people arelikely to be more accepting of the new technology.After all, if you might reasonably make the samemistake, is it fair to hold your self-driving car toa higher standard? But if their failures seem bi-zarre and unpredictable, adoption of this nascenttechnology will encounter serious resistance. Un-fortunately, this is likely to remain the case.
Would you buy a car that had a tendency—nomatter how rare—to run off the road in broaddaylight because it mistakes a glint off its cameralens for the sudden appearance of truck head-lights racing toward it at close range? Or one thatslams on the brakes on a highway because an ap-proaching rain storm briefly resembles a concretewall?
Suppressing these “false positives” is alreadya factor in some accidents. A self-driving Ubertest vehicle in Tempe, Ariz., recently killed a pe-
destrian walking her bike across thestreet at night, even though its sen-sors registered her presence. Thealgorithms interpreting that datawere allegedly at fault, presumablyconfusing the image with the all-too-common “ghosts” captured bysimilar instruments operating inmarginal lighting conditions. Butpity the hapless engineer who fixesthis problem by lowering thethresholds for evasive action, onlyto find that the updated softwaretakes passengers on Mr. Toad’s WildRide to avoid imaginary obstacleslurking around every corner.
Unfortunately, this problem isnot easily solved with today’s tech-nology. One shortcoming of currentmachine-learning programs is thatthey fail in surprising and decidedlynon-human ways. A team of Massa-chusetts Institute of Technologystudents recently demonstrated, forinstance, how one of Google’s ad-vanced image classifiers could beeasily duped into mistaking an obvi-ous image of a turtle for a rifle, anda cat for some guacamole. A grow-ing academic literature studies
these “adversarial examples,” at-tempting to identify how and whythese fakes—completely obvious toa human eye—can so easily foolcomputer vision systems.
Yet the basic reason is alreadyclear: These sophisticated AI pro-grams don’t interpret the world theway humans do. In particular, theylack any common-sense understand-ing of the scenes they are attempt-ing to decipher. So a child holding aballoon shaped like a crocodile or abillboard displaying a giant 3-D beerbottle on a tropical island maycause a self-driving car to take eva-sive actions that spell disaster.
As the six-decade history of AI il-lustrates, addressing these prob-lems will take more than simplyfine-tuning today’s algorithms. Forthe first 30 years or so, research fo-cused on pushing logical reasoning(“if A then B”) to its limits, in thehope that this approach wouldprove to be the basis of human in-telligence. But it has proved inade-quate for many of today’s biggestpractical challenges. That’s whymodern machine learning is tryingto take a holistic approach, more
EXHIBIT
akin to perception than logic. Howto pull that off—to achieve “artifi-cial general intelligence”—is theelusive holy grail of AI.
Our daydreams of automatedchauffeurs and robotic maids mayhave to wait for a new paradigm toemerge, one that better mimics ourdistinctive human ability to inte-grate new knowledge with old, ap-ply common sense to novel situa-tions and exercise sound judgmentas to which risks are worth taking.
Ironically, Mr. Musk himself is amajor contributor to misunder-standing of the actual state of theart. His ceaseless hyping of AI, oftenaccompanied by breathless warn-ings of an imminent robot apoca-lypse, only serve to reinforce thenarrative that this technology is farmore advanced and dangerous thanit actually is. So it’s understandableif consumers react with horror tostories of self-driving cars mowingdown innocent bystanders or killingtheir occupants. Such incidents may
be seen as early instances of malev-olent machines running amok, in-stead of what they really are: prod-uct design defects.
Despite the impression that Jet-son-style self-driving cars are justaround the corner, public accep-tance of their failures may yet proveto be their biggest speed bump. Ifproponents of autonomous technol-ogies—from self-driving cars to mil-itary drones to eldercare robots—are to make their case in the courtof public opinion, they will needmore than cold statistics and con-trolled testing. They must also ad-dress the legitimate expectation ofconsumers that the new generationof AI-driven technology will fail inreasonable and explainable ways.
As the old joke goes, to err is hu-man, but it takes a computer to re-ally foul things up. Mr. Musk wouldbe well advised to hear that mes-sage before shooting the messenger.
Dr. Kaplan teaches about artificialintelligence at Stanford University.His latest book is “Artificial Intel-ligence: What Everyone Needs toKnow.”
BY JERRY KAPLAN
SERG
EBLOCH
.
�
C6 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
REVIEW
Put thegiant
tortoisesin coldstorageand drainthe TreviFountain.
SEEKING TO STEM the tide oftourists overrunning theirbeautiful cities, pristine ham-lets and immensely photogenicrain forests, localities fromVenice to Queenstown, NewZealand, are begging touriststo stay away, as a Journal arti-cle reported last week.Whether stampeding drunkthrough St. Mark’s Square atmidnight or scaring off themonkeys in the Amazon, out-of-control vacationers arewreaking havoc everywhere.
So far, the victims of ma-rauding visitors haven’t hadmuch luck stemming the bar-
SCREENWRITER AND DIRECTOR Paul Schrader, of “Taxi Driver” and“American Gigolo” fame, didn’t see a movie at the theater until he wasa teenager. He was raised in Grand Rapids, Mich., by strict Calvinistparents who forbade him from going to the cinema, listening to rockmusic, dancing or working on the Sabbath. Finally, at 14, he sneaked
out to see “The Absent-Minded Professor.”These days, Mr. Schrader is no longer a Calvin-
ist, but he’s still deeply religious. He converted toEpiscopalianism after his children were born.“Calvinism was all the guilt and none of the rit-
ual, and Episcopalianism was the opposite,” he says. Three years ago,he became Presbyterian, mostly because his local church had a musicprogram that he enjoyed.
Now 71, Mr. Schrader is revisiting his Calvinist roots. “First Re-formed,” a film he wrote and directed about a despairing ministerin the Calvinist tradition, opened May 18.
BY
ALEXANDRA
WOLFE
ministry, where he meets a youngenvironmental activist couple,one of whom shows signs of be-coming violently dedicated to thecause. The reverend sympathizeswith their views and begins to fallapart himself as he despairsabout the state of the environ-ment. The film touches on themesof faith, guilt and self-destruc-tion, and the viewer is left towonder what the minister’s truemotivations are. Mr. Schrader in-tentionally left some questionsunanswered in the film. “It’s notdidactic,” he says.
Mr. Schrader went to seminaryschool at Calvin College in Michi-gan, but he decided against be-coming a minister. He had longhad an interest in storytelling andheaded to the University of Cali-fornia, Los Angeles, where heearned a master’s degree in filmstudies. After graduation, he be-came a film critic for the Los An-geles Free Press and later Cinemamagazine.
In 1969, he attended a screen-ing of Robert Bresson’s 1959 film“Pickpocket,” which inspired hiscurrent movie’s style. He thoughtthe stark perspectives, sparsescenes and minimal feel of thecamerawork evoked a spiritual re-action in the viewer. “It wasn’t aconnection of content,” he says.“It was a connection of style.”
He started writing “TaxiDriver,” his first film, in 1972. Hisfirst marriage had fallen apart,and he was out of a job anddeeply in debt. He thought he’dtry to channel his despair into afilm. “You need to externalizethis,” he told himself.
Mr. Schrader had been readingand writing scripts for studios tomake extra money, so he knewthe format. Within a couple ofweeks, he’d written two drafts. “Ijust wrote continuously,” he says.“I’d lie down on the sofa, then getup and go back to work.”
He went on to write “AmericanGigolo,” the 1980 drama starringRichard Gere as a male escort whogets caught up in a murder case,then directed and co-wrote“Mishima: A Life in Four Chapters,”a fictionalized biography of actorand director Yukio Mishima in 1985.
He was surprised when hisscreenplay for “The Last Tempta-
tion of Christ” (1988) provoked controversy andboycotts among some Christian groups, who calledthe movie blasphemous for its characterization ofa struggling, doubting Jesus. Even his father par-ticipated in local protests. “I said, ‘Are you part ofthe movement to block the film?’” Mr. Schradersays. “He said, ‘Yes, but only locally.’”
Mr. Schrader is being more careful with his lat-est film. He screened “First Reformed” for someseminary audiences before its wide release in Mayto gauge their reactions, which he says were favor-able. “I’ve gotten burned by ‘The Last Temptationof Christ’ thing,” he says.
Mr. Schrader still goes to church regularly. “I doappreciate the structure of the Sunday service,” hesays. “Organizing your week and taking time outto be quiet I think is very useful.”
After 14 years in Los Angeles, he splits his timetoday between Manhattan and his country homenorth of the city with his wife, actress Mary BethHurt. His son teaches history at a high school inMichigan, and his daughter works for a specialtywood mill company in New York City.
He worries about the state of the film industry,saying it’s hard to get independent films made, andis concerned about the environment and politicalinstability. “I think that if you’re optimistic, you’renot paying attention,” he says.
MAT
THEW
SCOTT
GRA
NGER
FORTH
EWALL
STRE
ETJOURN
AL
Rome’s Trevi Fountain and fillit with mud and whether tocover the Blarney stone withpoison ivy. “Put the giant tor-toises in cold storage,” sug-gests Chiquita La Bonita,founder of the animal-rightsgroup Doctors Without Tur-tles. “You know how annoyingit is when you get to the zooand the lions are locked up forthe day? Well, try flyingacross the world to the Gala-pagos, only to find that the gi-
Skip theSelfie andRun: BusyLocales GetToughWithTourists
barian tide. Fodor’s has a listof places that tourists havebeen implored to avoid, but alot of tourists can’t read. Mypeerlessly placed, absolutelyauthoritative sources all saythat the time has come to playhardball.
“Ban alcohol in the fiords,”says Edvard McMunchkin, theexpert in Scandinavian eco-tourism. “The fiords are great,ja, sure, but without a fewjolts of liquor to get you goingin the morning, Norway canget boring in a hurry.”
“Frisky rodents in the gymwork wonders,” says Fats diMachiavelli, director of publicmayhem in Verona. “Add thatto a few bedbug surprises andvisitors lose interest in thequestion: ‘Wherefore art thouRomeo?’ They saddle up andride.” Cairo residents plan tosend tourists to the Spanx in-stead of the Sphinx. In Fiji, ex-tra sharks will be brought induring the high season.
Another strategy is to shutthe sights down. Long into thenight, tourism officials are de-bating whether to drain
ant tortoisesaren’t coming
out for the nextthree years.”
Leaders incities that tookpre-emptive an-
titourist measuresyears ago have little
sympathy fortoday’s belea-guered com-
munities. “PeterJackson wanted to
film ‘The Lord of theRings’ here in Cleve-
land, but we told him to forgetit, we already have enoughtraffic problems as it is withthe Rock & Roll Hall of Fameand LeBron,” says Sid Hartha,a retired malingerer who grewup in the Mistake by the Lake.
“The New Zealanders wel-comed Jackson with openarms. So now, if they’ve got amillion school kids tramping allover the vegetation looking forFrodo, that’s their problem.”
Antitourist measures goback a long way. In the MiddleAges, the Little Garden Club ofthe Dardanelles actually im-
ported bubonic plague to dis-courage pilgrims from stop-ping by picture-perfectConstantinople on their way tothe Holy Land, before thingsgot out of control. The Anglo-Saxons covered Stonehengewith filthy scaffolding for 350years. And the original pro-posed site of the Eiffel Towerwas not Paris, but Helsinki.
“The city fathers knew thatHelsinki could not possibly re-tain its aura of cool if they letEiffel build his stupid towerthere,” says Toots Sibelius, au-thor of “You’re Finnish in ThisTown.” He adds, “So they letthose clowns in France build it.Well, you can see the results.”
The attitude voiced by Mr.Sibelius is prevalent amongcities without problems—orsights. “Those jokers in Veniceshould just shut their pieholes,” says Ashley Ash ofCrockpot, U.K., famous for itsnow-closed steel plant. Headds, “My feeling is: If youdon’t want tourists swarmingall over the Bridge of Sighs,don’t build the Bridge ofSighs.” N
ISHANTCH
OKS
I
MOVINGTARGETS
JOEQUEENAN
He considers it his magnum opus, after havingdirected nearly 20 films. His screenplays, includingfor “Taxi Driver” and “Raging Bull,” are bestknown for their combustible, self-destructive malecharacters. He has written or co-written screen-plays for four Martin Scorsese films, including“The Last Temptation of Christ,” and has beennominated twice for the Golden Globe for bestscreenplay.
For him, his latest film ties the two parts of hislife together. “There was a connection between mysacred past and my profane present,” he says. “Itwas a connection of spirituality and cinema.”
“First Reformed” follows the struggles of a rev-erend, played by Ethan Hawke, who has lost hisson in the Iraq war. He tries to find solace in the
“Therewas aconnectionbetweenmy sacredpastandmyprofanepresent.”
WEEKEND CONFIDENTIAL
Paul SchraderThe director revisits his Calvinist roots
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C7
BY BEN YAGODA
BEATINGTHE HEAT‘Yesterdayat ConeyIsland,’ aWeegeeclassicfrom
July 1940.
READ ONLINE AT WSJ.COM/BOOKSHELF
ONE OF THE many iconicphotographs taken byWeegee appeared in theNew York newspaper PMon July 22, 1940. The pic-
ture is brimming with swimsuited fig-ures—tens of thousands? hundreds ofthousands?—stretching from the sea tothe horizon. At the top is a sliver ofsky and a distant glimpse of ConeyIsland’s tallest ride, the Wonder Wheel.The people in the foreground are allpeering up at the camera, most withtheir arms up to shield their eyes fromthe sun. But despite the discomfort,they are willing, maybe eager, to bepart of the spectacle of near-nakedhumanity en masse.
The words atop the photo in thenewspaper read “Yesterday at ConeyIsland.” Christopher Bonanos, cityeditor of New York magazine and nowWeegee’s biographer, makes the casethat, in all probability, the headline wasa lie. He tracked down a little girl whoappeared in the photo, and that girl,now an elderly woman, is pretty surethat she and her family were at thebeach not on July 21 but two weeks ear-lier, for the holiday weekend. If she’scorrect, Mr. Bonanos writes, “Weegeemade the picture at his leisure on a rea-sonably warm afternoon (the high onJuly 5, 1940, was eighty degrees) thatwas sure to be crowded because it fellacross the holiday. Then he banked it,waiting for a scorcher, and offered it tohis editor as fresh material when it wastwo weeks old.” He concludes, “Thatmight not be a firing offense, but it’scertainly a cheat.”
FlashBy Christopher BonanosHolt, 379 pages, $32
That’s just one of several bits of gooddetective work in “Flash,” Mr. Bonanos’sjudicious, snappily written life of the pro-totypical New York street photographer,whose influence and stature have onlygrown since his death in 1968 at age 69.Mr. Bonanos’s shoe-leather reporting isespecially welcome since many of the sto-ries Weegee told about his exploits weredubious, and some were contradictory.
That most obviously applies to thewhole name thing, and Mr. Bonanosstarts his book with an investigation ofhow Arthur (Usher) Fellig, who was bornin the current Ukraine and emigrated tothe Lower East Side at age 10, becameWeegee. The photographer oftenclaimed the name stemmed from hisseemingly clairvoyant knack, as a youngfreelancer, for showing up just as newswas about to break: It was as if he had abuilt-in Ouija board—and a commonpronunciation of the word is “Weegee.”But Mr. Bonanos unearths a more plau-
sible origin story. In the1920s, before he startedselling photos to news-papers, Fellig had a jobin the New York Timesdarkroom drying offprints with a squeegee.His next job was moreelevated but his co-work-ers still mockingly calledhim “squeegee boy.”
“Over time,” Mr. Bo-nanos writes, “as hegained their respect andas his technical skills be-came evident, the mock-ery flipped into praise.‘Squeegee boy’ turnedinto ‘Mr. Squeegee’ andeventually became Wee-gee.” The end of the ap-
pellation trail came in 1941, when Wee-gee, vaulted from anonymity by his workin PM, started rubber-stamping the backof his photos with a demand that they becredited to “Weegee the Famous.”
“Yesterday at Coney Island” is insome ways an atypical Weegee photo-graph. For one thing, it’s a happy scene,instead of depicting calamity or vice. Italso frames a capacious landscape, andWeegee specialized in shots that liter-ally got in his subjects’ faces. (He didn’thave to worry about focus, because healmost always took pictures from either10 or 6 feet, and he could apply thesettings for either in an instant on his4-by-5-inch Speed Graphic camera.)Finally, it was taken in the light of day,and Weegee was a nighttime streetcrawler. Not for nothing is Mr. Bo-nanos’s book titled “Flash”; whenshooting after dark, Weegee alwaysthrew out a blast of light, giving his
BOOKS
photos their flat harshness. His illumi-nated subjects, sometimes with a star-tled look in their eyes, are usually sur-rounded by darkness, as if in a paintingby Georges de La Tour.
But in another way the Coney Islandphoto is also characteristic. The wordI’m thinking of is “skin.” Weegee’s life-long photographic project was to inti-mately expose his subjects, and shoot-ing them without their clothes on wasjust one way to do so. (His first pub-lished book of photos was called “NakedCity,” which inspired the 1948 film noir.)Others were to snap them when theywere drunk, asleep, grieving, in policecustody or dead. He once said of hismany photos of corpses, usually lyingon the street, “I gave them all my loveand care, made ’em look like they werejust taking a little rest.” In the introduc-tion, Mr. Bonanos writes of Weegee, “Hewas, like most photographers, a voyeur.Maybe more than most.” Definitelymore than most, I’d say. But Mr. Bo-nanos doesn’t come back to this idea tillan aside in a late chapter. My one criti-cism of “Flash” is that it doesn’t exploreWeegee’s penchant for flouting theassumption that people are entitled totheir privacy.
The last half of the photographer’scareer—more or less after he dubbedhimself Weegee the Famous—is, in Mr.Bonanos’s telling, a sad story. On theone hand, his artistry started to berecognized: In the ’40s he published“Naked City” and another collection,“Weegee’s People,” and was representedin two exhibitions at the Museum ofModern Art. On the other, the quality ofhis work declined. He stopped doingspot news, and spot news was hismétier. He experimented with speciallenses and other technology that pro-duced not especially interesting dis-tortion effects, and he found the mainmarket for his pictures were men’s mag-azines that were like Playboy but abouttwo rungs down the market, with nameslike Stag, Eye and Candid.
After a brief unhappy marriage,Weegee was fortunate to find a lovingcompanion, WilmaWilcox. He treated herpoorly, but she stayed around and, afterhis death, kept the Weegee flame alive. In1993, she donated his entire archive—some 19,000 photographs and 6,000 neg-atives—to the International Center ofPhotography. That ensured his legacy: It’sled to several exhibitions and mono-graphs; to a “rediscovery” of his tabloidgenius every few years, like clockwork;and now to this fine biography.
Mr. Yagoda, the author of “Memoir:A History” and other books, conductsthe blog MoviesInOtherMovies.com.
New York After DarkA snappily written life of Weegee the Famous, an ever-ready on-the-spotnews photographer with a taste for sex and death—and the soul of a voyeur
Moment of passion at the Palace Theater, captured by Weegee’s infrared camera in 1943.
GETTY
IMAGES;INTERN
ATIONALCENTEROFPH
OTO
GRA
PHY
American EdenBy Victoria JohnsonLiveright, 461 pages, $29.95
BY PENELOPE ROWLANDS
IT WAS A CITYSCAPE so strikingthat visitors, arriving by sea,turned rapturous. “A lovely sweepof notched shoreline” is howTocqueville described it, with
“blossoming trees on greensward slopingdown to the water, a multitude of small,artfully embellished candy-box houses inthe background.” It was New York in theearly 19th century, before Manhattan’sbeautiful hills were leveled, its windinglanes forced into a grid.
The city was as yet a backwater, lack-ing the cultural and scientific institu-tions that a great city requires. Ninetymiles to the south, Philadelphia led theway in civic infrastructure and sheer so-phistication. Within a few decades, all ofthat would change, in large part due tothe efforts of one man, Dr. David Hosack,a botanist, an educator and, in the wordsof one colleague, a physician of “zeal,Industry and Talents.” Above all else, hewas a civic-minded, forward-thinkingvisionary—and one extraordinarily adeptat turning his dreams into reality.
In her captivating biography “Ameri-can Eden: David Hosack, Botany, andMedicine in the Garden of the EarlyRepublic,” Victoria Johnson describeshow, at a time when “Philadelphiansthought they inhabited the Athens ofAmerica,” Hosack helped to tip thescales in New York’s favor. Along theway, she restores this attractive poly-math—who today is mainly remem-bered, thanks to a small role in a certainhip-hop musical,as the doctor-in-attendance atthe 1804 duelbetween two ofhis patients,Aaron Burr andAlexander Ham-ilton—to hisrightful place inAmerican his-tory. The rescuefrom oblivion islong overdue.
Hosack wasborn on Man-hattan Island in1769, the son ofa Scottish mer-chant. He grewup in a New York under British occupa-tion and, in Ms. Johnson’s words, “cameof age just when the newly independentnation was most in need of his energy,intellect, and prodigious talent for orga-nizing other people.” Formal medical ed-ucation in America was then in its in-fancy. Even after receiving his M.D. fromthe University of Pennsylvania, he felt sopoorly prepared for medical practice thathe headed to London and Edinburgh forfurther study. There he learned the latestsurgical techniques and, as he later con-fessed to his adult son, was “very muchmortified by my ignorance of botany.”Until Hosack visited the university gar-dens of Great Britain, he had consideredplant-based materia medica mere sup-plies to be purchased from apothecaries.Now medical botany became his obses-sion, a body of rapidly developing scien-tific knowledge that he was eager tomaster and bring to America.
Upon his return to New York in 1796,the city of 60,000 seemed decidedlyprovincial: “There was no Royal Society[of Medicine], no Linnean Society, noBrompton Botanic Garden,” Ms. Johnsonwrites. “Hosack turned the situation over
PleaseturntopageC11
TheAmbitiousDr. Hosack
PLANTING SEEDS David Hosack aspainted by Rembrandt Peale, ca. 1826.
ALAMY
EarlyAmerica’sforemostbotanistwas alsoNewYork’sgreatestinstitutionbuilder,a man of‘IndustryandTalents.’
Time Is an Illusion:Priyamvada Natarajan
on Carlo Rovelli’snew physics C8
It’sAlive! ‘Frankenstein’at 200, and a newbiography of authorMary Shelley C9
.
�
C8 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
BOOKS‘My own suspicion is that the Universe is not only queerer than we suppose, but queerer than we can suppose.’ —J.B.S . HALDANE
BY PRIYAMVADA NATARAJAN
HUMANS HAVE always beenobsessed with time and havemarked its passage in part bymeasuring it with ever in-creasing accuracy, yet its true
nature has remained elusive. We all knowfrom our subjective experience that whenwe are placed on hold while waiting for arepresentative, even a few minutes feel likeeternity, while time appears to hurtle onwhen we are in the midst of a pleasurableactivity. Though physics, philosophy andmetaphysics have all grappled with the con-cept of time, we are still confounded by it.
The physicist Carlo Rovelli takes a freshstab at the conundrum in “The Order ofTime” (beautifully translated from theoriginal Italian by Erica Segre and SimonCarnell). A masterly writer who succeededin explaining some extraordinarily complexideas in his last book, “Seven Brief Lessonson Physics,” he now turns to tackle anddemystify perhaps the most profoundmystery of all—time. Mr. Rovelli is one ofthe founders of loop quantum gravity (LQG),a theory that attempts to unite quantummechanics with gravity. This unfinishedtask, to which string theory also aspires, ispart of physicists’ quest for a theory ofeverything. In his own research, Mr. Rovellihas focused on trying to explain the emer-gence of time in LQG. Unriddling the enigmaof time is his forte and very much part ofhis day job.
In this little gem of a book, Mr. Rovelli firstdemolishes our common-sense notion of time.He then examines where that leaves us andhow a deeper understanding of gravity mighthelp ascribe meaning to time. He concludesthe second section of the book with a descrip-tion of what a world without time might looklike. In the final part, he resurrects time,diving off from his own LQG research to
The Order of TimeBy Carlo RovelliRiverhead, 240 pages, $20
explain how time could emerge and flow aswe are accustomed to its doing.
Mr. Rovelli deftly leads us through some ofthe most profound ideas in Einstein’s theoriesof special and general relativity, explainingthese concepts in his characteristically lyricalstyle with numerous apt analogies. Here is anexample, where he expounds on Einstein’sinsight that gravity, the shape of space andthe motion of bodies are intri-cately linked. Starting with thequestion of how the Earth and suncan attract each other from afarwithout touching, Mr. Rovelli de-scribes how this tug is transmittedindirectly to each via their effecton what lies between them—spaceand time. Each object affects thespace and time that surrounds it,“just as a body immersed in waterdisplaces the water around it.”
Mr. Rovelli explains how grav-ity mediates the modification ofthe structure of time, causingtime to lose its universality andunity. He clarifies how gravity inturn dictates the passage of time,and he shows that time thereforepasses faster in the mountainsthan it does at sea level. (Clocks run morequickly at higher altitudes because theyexperience a weaker gravitational force thanclocks on the surface of the Earth.) Beforeyou start worrying about resetting yourwatches when hiking up a mountain, beassured that this difference is measurable inprinciple but is imperceptibly small. Mr.Rovelli also provides interesting examples ofhow we can all witness the slowing down oftime. According to physics and Einstein’stheories, time passes more slowly in someplaces than others, and it transpires moreslowly for moving objects. Einstein inferredthese effects before we even had clocksaccurate enough to make such measure-ments. His predictions have all beenvalidated since with atomic clocks.
Incidentally, these effects on the flow oftime are essential for accurate navigation on
Earth using the Global Positioning System.GPS consists of satellites orbiting 12,400miles above the Earth at a speed of 8,700miles per hour, with precise atomic clocks onboard. Special relativity predicts that thesemoving clocks run about seven microsecondsslower per day than clocks on Earth. Accord-ing to Einstein’s theory of general relativity,on the other hand, the orbiting clocks should
tick faster than the ones on Earth,due to the difference in thestrength of Earth’s gravity. The netdifference is a daily gain of 38microseconds compared withterrestrial clocks, a difference forwhich the GPS system automati-cally corrects.
Recasting the rhythm and flowof time, Mr. Rovelli shows that acommon present simply does notexist. “The world is not like aplatoon advancing at the pace ofa single commander,” he writes.“It’s a network of events affect-ing each other.” Asking which“local time” is correct, he adds, ismeaningless. “We might just aswell ask what is most real—thevalue of sterling in dollars or the
value of dollars in sterling.”In the second part of the book, he investi-
gates what makes the past and the futuredistinct, rendering a direction for time. Thearrow of time is of consequence for ushumans, since there is a tangible difference“between past and future, between causeand effect, between memory and hope.”Meanwhile, for the laws of physics, there isno such distinction: A set of equations thatdescribes the evolution of a system in timeis equally valid going forward or backward.
This symmetry is obeyed by all laws barone. It is in this portion of the book that Mr.Rovelli’s explanatory power shines, when hedescribes the notion of entropy. Entropy is ameasure of the disorder of a system, and “itis entropy, not energy, that drives theworld.” The universe is moving from lowentropy (orderliness) to higher entropy
(disorder) as time passes. The 19th-centuryAustrian physicist Ludwig Boltzmannshowed us that entropy exists because weare unable to distinguish between the manypossible configurations of a system—that is,our descriptions are inherently blurry. Thearrow of time is intimately connected tothis blurring: If we could perceive the worldin all of its minute detail, Mr. Rovelliexplains, the notion of time would vanish.
He moves on to talk about his own workin loop quantum gravity and explains thatthe theory does not describe how thingsevolve in time but rather how things arewith respect to each other. LQG doesn’thave time explicitly in its equations, yet theconcept of time, he argues, can naturallyarise and emerge in these equations. Herethe reader might find it challenging to staywith Mr. Rovelli, since LQG is an abstruseand complicated subject.
The final part of the book veers intometaphysical territory as Mr. Rovelli takeson the question of why we perceive time inour minds and bodies if in fact it doesn’texist. Quoting freely from Buddhist texts,the Mahabharata, Kant, Shakespeare andProust, Mr. Rovelli suggests that the initialconditions of the particular universe thatwe inhabit make us, in effect, “beings madeof time.”
The closing chapter is worth a read inand of itself. Here Mr. Rovelli describes howour awareness of the passing of time isactually internal. Ultimately, he writes, “thisbeing between past and future events iscentral to our mental structure—this for usis the ‘flow’ of time.” He concludes: “Inexo-rably, then, the study of time does nothingbut return us to ourselves.”
This is an ambitious book that illuminatesa thorny question, that succeeds in being apleasurable read even if it does not conclu-sively solve the riddle of time.
Ms. Natarajan, a professor of astronomyand physics at Yale University, is the authorof “Mapping the Heavens: The RadicalScientific Ideas That Reveal the Cosmos.”
Stop All the ClocksRELATIVISTIC The semicircular ‘Einstein ring’ in this image from the Hubble Space Telescope is formed by light from distant stars bent by the gravity of the yellow galaxy inside it.
SCIENCE
SOURC
E
An elegantgrapplewith oneof physics’deepestmysteries:Is time justan illusioncaused bythe limitsof humanperception?
When Einstein WalkedWith GödelBy Jim HoltFSG, 368 pages, $28
BY STEVEN POOLE
WE ALL feel pressedfor time, but howmuch time is actu-ally left on a grandscale? If in fact the
universe is going to keep expandingforever, then you might very well be a“Boltzmann brain.” This is a collectionof particles winking into existencethanks to random fluctuations in theinterstellar vacuum. Since we areassuming time is infinite, these struc-tures will sometimes form disembod-ied human brains, and at least one ofthem will be an identical copy of yourcurrent state of consciousness.
Such is one of the mind-bendingideas explored in this collection ofpreviously published essays by JimHolt, who is one of the very best mod-ern science writers.
Some chapters are elegant profilesof scientists and mathematicians:
Benoit Mandelbrot, coiner of the term“fractals,” who inspired a generationof hippies with graphics of his “Man-delbrot set”; Alan Turing, the WorldWar II code breaker and inventor ofmany basic concepts in modern com-puting; Francis Galton, the cousin ofDarwin who pioneered statistics andalso coined the term “eugenics.”
Other essays are about particularpuzzles, for example whether con-sciousness is a fundamental propertyof all matter (an ancient idea knownas panpsychism, now undergoing aserious revival), or the four-colorproblem, which asks whether fourcolors is the most we need for anyconceivable map to avoid areas of thesame color touching. Here Mr. Holtintroduces us to the lovely concept of“criminal maps”—not atlases of pro-spective bank jobs but maps that, ifthey existed, would violate the four-color hypothesis.
Some pieces limn the history of acertain idea—for instance, the conceptof the infinitely small, or the notion offorces that can act on somethingwithout touching it, long shunned as(in Einstein’s words) “spooky action ata distance.” Other chapters are longbook reviews, as when Mr. Holt de-scribes the abstrusely beautiful hier-archy of infinities discovered by themathematician Georg Cantor and thengently savages (“a book that prizesdifficulty but not rigor”) a book onthe topic by David Foster Wallace. An-other book he describes as “full of thesort of excess detail that mathe-maticians call ‘hair.’ ” In this sense it
is a pleasure to report that, asidefrom a few inevitable repetitionsbetween essays, Mr. Holt’s book isperfectly bald.
Two large problems dominate thevolume: the nature of time and thenature of mathematics itself. The won-derful title essay begins in 1933, theyear Einstein settled down to spendthe last two decades of his career atthe Institute for Advanced Study inPrinceton, N.J. There, 10 years later,he made friends with a younger man,the great logician Kurt Gödel. In Mr.Holt’s telling, they make a delightfullyodd couple. Gödel believed in ghostsand “had a morbid dread of being poi-soned by refrigerator gases,” but Ein-stein went to work just to have theprivilege of walking home with him.
Gödel pointed out to Einstein thatthe equations of general relativity ap-peared to allow time travel. Fromthis, Gödel drew the moral that timecould not really exist. Einstein, for hispart, hewed to the “block universe”picture of space-time, according towhich the future already exists, asmuch as the past does. But time itselfproves very difficult to pin down.Perhaps the best definition of it isthe one semi-jokingly quoted by thephysicist John Wheeler: “Time is na-ture’s way to keep everything fromhappening all at once.”
What, meanwhile, are numbers? Mr.Holt writes of the French neuroscien-tist Stanislas Dehaene, who believesthat “we have a sense of number thatis independent of language, memory,
and reasoning in general.” What doesthis imply for the millennia-long phil-osophical dispute about whethernumbers really exist, independent ofhuman minds? Most great mathema-ticians have been “Platonists,” believ-ing that numbers have a real if ab-stract independent existence, whichmeans that a new mathematical resultreally is a discovery rather than aclever invention. But if that is true,how can purely physical animals likeus gain access to the Platonic domain?
Mr. Holt himself comes downsquarely on the side of the anti-Platonists in an essay lucidly chartingthe hunt for patterns in the distribu-tion of prime numbers (those thatcannot be divided by anything exceptthemselves and 1). One researchersays that the sequence of primes “hasa reality that is far more permanentthan the physical reality surroundingus.” But Mr. Holt demurs. Mathemat-ics, he insists, is “man-made, a terres-trial artifact.” A million years fromnow, he asserts, “mathematicians willhave awakened from their collectivePlatonist dream.”
It’s one point in the book where theauthor boldly goes against the consen-sus of the research community he isreporting on. I would bet he’ll turnout to be wrong, but then neither ofus will be around in a million years.Unless we meet in space as Boltzmannbrains, a prospect I doubt either of uswould relish.
Mr. Poole is the author of “Rethink:The Surprising History of New Ideas.”
Plato,PhysicsAnd BrainsIn Space
GIANT STEPS Kurt Gödel and Albert Einstein in Princeton, N.J., 1954.
GETTY
IMAGES
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C9
BOOKS‘Invention, it must be humbly admitted, does not consist in creating out of void, but out of chaos.’ —MARY SHELLEY
BY ELIZABETH LOWRY
IN HER 1831 introduction tothe third edition of “Fran-kenstein,” the Gothic mas-terpiece she wrote when shewas only 19, Mary Shelley
tries to answer the question “fre-quently asked” by her readers:“How I, then a young girl, came tothink of and to dilate upon so veryhideous an idea?” She goes on to re-call the by-now-legendary circum-stances of its conception: Mary andher lover (later husband) the poetPercy Bysshe Shelley, while stayingat Lake Geneva with Lord Byron andhis doctor, John Polidori, weredrawn one rainy night into a com-petition to see who could write themost terrifying ghost story—a con-test Mary surely won hands downwith her tale of an overreachingscientist and his uncontrollablecreature. But the 34 year old, look-ing back, neatly sidesteps what wereally want to know: How exactlydid this inexperienced teenager,who had never published anythingbefore, manage to create the mostenduring horror story of all time?How did someone so apparentlysheltered conjure a literary arche-type that speaks with visceral di-rectness, as Shelley herself saw, “tothe mysterious fears of our nature”?And why, having launched herselfon what promised to be a trium-phant writing career, did she nevermatch that first success again?
By the time of Mary Shelley’sdeath in 1851 at age 53, she’d beenwidowed for three decades, havingdevoted herself to editing her latehusband’s verse and prose whileraising their only surviving child.Her own later works—includingfive further, rather pedestrian nov-els and some worthy but dull his-torical and travel writing—had metwith mixed reviews. Yet the fameof “Frankenstein” simply grew, per-sisting well beyond her lifetime,until its reputation eclipsed herown. Until the mid-20th century,critics have tended to see MaryShelley as a one-book wonder.
Her resurrection as a subject forserious intellectual inquiry beganwith Muriel Spark’s spirited 1951biography of the author—and eventhen, sympathetic as Spark was toMary’s overall creative develop-ment, her most famous work wastreated as the byproduct of an im-mature intelligence. “Frankenstein”was wonderful, declared Spark, ina verdict that has proved hard toshake, “not despite Mary’s youth,but because of it. Frankenstein isMary Shelley’s best novel, becauseat that age she was not yet wellacquainted with her own mind.”
Subsequent biographies havebeen of two types: those, like AnneK. Mellor’s carefully considered“Mary Shelley: Her Life, Her Fic-tion, Her Monsters” (1988) and
In Search of Mary ShelleyBy Fiona SampsonPegasus, 304 pages, $28.95
Miranda Seymour’s stunninglycomprehensive “Mary Shelley”(2000), which try hard to rouse ourenthusiasm for Mary’s output post-“Frankenstein,” and others, likeDaisy Hay’s racy “Young Roman-tics” (2010), that regard the periodmarking the start of Mary’s careeras a writer, which also happens tofeature her sensational elopementwith Percy Shelley, as the mostvital. British poet and academicFiona Sampson’s new study “InSearch of Mary Shelley,” focusingalmost exclusively on her subject’syouth, belongs squarely in thesecond camp.
Ms. Sampson maintains that“the later years of a life—of any-one’s life—do not build a personal-ity, and they don’t go on to affect afuture,” but this is just windowdressing. She wants to tell us aboutwhat she calls the “chewy” bits—the sex scandals, the hauntednights in Swiss villas, the Sturmund Drang. And she does it in away that is unapologetically selec-tive, giving us her Mary in a seriesof “freeze frames” or tableaux:biography by lightning flashes.Anyone who is looking for a bal-anced account of Mary Shelley’s
troubled life should begin with Ms.Mellor or Ms. Seymour. If you areafter bravura scene-setting, how-ever, and an ardent inhabiting ofthe book’s subject, Ms. Sampsoncan’t be bettered.
Ms. Sampson throws herselfwholeheartedly into satisfying ourcuriosity about the psychologicaltriggers behind “Frankenstein.”Little of what she says is new, butthe way in which it is presented ishair-raisingly immediate. “Franken-stein” offers us a chilling picture ofthe horrors of birth and the failureof youthful ideals, and by the timeshe came to write it, Mary wasalready painfully familiar with thefirst and was rapidly becomingacquainted with the second.
Her parents were William God-win, the anarchist philosopher, andthe trail-blazing feminist MaryWollstonecraft, author of “A Vindi-cation of the Rights of Woman”(1792). Within 11 days of Mary’sbirth in London in 1797, however,Wollstonecraft lay dead of puer-peral fever, leaving Godwin on hisown to raise the new baby and herhalf-sister, Fanny (Wollstonecraft’sdaughter by a previous lover). Ms.Sampson gives full weight to theeffect of this bereavement on Mary,who would go on to lose four ofher own five children and forwhom gestation and childbirth
became sources of torment. Shebegan “Frankenstein” after beingdelivered the previous year of apremature infant who did not sur-vive, and only five months after thebirth of her eldest son, William.Her writing of the book coincidedwith a third pregnancy, duringwhich she must have been plaguedby fears. They course through heragonized description of VictorFrankenstein’s struggle to “infuse aspark of being into the lifeless thingthat lay at my feet,” and when weread that at last “a convulsivemotion agitated its limbs,” it’s hardnot to agree with Ms. Sampson thatthe detail seems “better suited to adeathbed than to a birth.”
If, as Anne Mellor pointed out,“Frankenstein” articulates, “per-haps for the first time in Westernliterature, the most powerfully feltanxieties of pregnancy,’” it alsoexplores the catastrophic conse-quences of bad parenting. Godwinwas a distant father, whose remar-riage when Mary was 4 to a Mrs.Clairmont, a woman his daughtercame to loathe, left Mary feelingsidelined. Ms. Sampson revealsthat, as a teenager, Mary some-times suffered from a mysteriouslyswollen arm: “rigid, and huge withbandages,” her limb resembled “amonstrous appendage stitchedfrom some other body onto herown.” Mary’s self-disgust and herlonging for parental love are chan-nelled in the monster’s anguishedplea to its creator for compassionand care—a plea that Victor Fran-kenstein rejects.
By the time her father’s glamor-ous young disciple, the buddingpoet Percy Shelley, appeared on thescene, Mary’s emotional isolationwas extreme. She was 16; he was21, the rebellious heir to a baron-etcy, a self-proclaimed atheist andradical, and a proponent of freelove. He was also married, with onechild and another on the way, andwhen he and Mary eloped to Eu-rope they left a chain of humanwreckage behind them. The stigmaattaching to the Godwins ruined theprospects of Mary’s half-sisterFanny, who took a fatal overdose oflaudanum in October 1816. Twomonths later, Percy’s wife Harriet—pregnant, possibly by Percy, whohad earlier invited her to join himand his lover abroad—drownedherself in the Serpentine.
Ms. Sampson is scathing aboutthe hypochondriac, self-centered yetundeniably charismatic Percy, deftlyanatomizing the predicament inwhich Mary found herself “of beingsimultaneously unable to reasonwith him yet duty-bound to protecthis particular fragility.” His manicdoggedness, always teetering on thebrink of hysteria, went straight intoher depiction of the obsessiveVictor Frankenstein. After Harriet’sdeath they married and Mary, hav-ing failed to grasp her husband’scommitment to his free-love proj-ect, had to stand by while he pur-sued her own stepsister, Claire
Clairmont (who was also, for a time,the mistress of Byron), and a stringof other women.
Ms. Sampson doesn’t minimizePercy’s infidelities, depicting themas foully traumatic for Mary. Thecoldness in her which he latercomplained of reads like the by-product of the numbing and set-tled depression from which shewas suffering by her 20s. Ms.Sampson observes shrewdly thatfor the second Mrs. Shelley, “Percyhas to mean a great, undying loveor else the sacrifices she’s alreadymade are pointless.” These sacri-fices would eventually include thedeaths of both her son William anddaughter Clara, who fell victim,during successive disease-riddensummers in Italy in 1818 and 1819,to their father’s indefatigable needfor travel and stimulation and hisfailure to get proper medical carefor them when they fell ill.
There was worse to come. Marywas appalled to discover, afterPercy’s own death by drowning inthe Gulf of Spezia in 1822, that hisfriends had been coached by him tobelieve that she had failed him as awife “just as she was coached,eight years earlier, to believe thatHarriet had failed him.” Ms. Samp-son argues that Mary never under-stood “that her youthful decisionto run away with Percy could bemisread as self-indulgence ratherthan passionately held moral andpolitical principle,” but this con-tention is belied by the guilty sym-pathy she would express for “poorHarriet, to whose sad fate I attri-bute so many of my own heavysorrows as the atonement claimedby fate for her death.”
Mary’s 29 years as a widow, inwhich she settled down to do-mesticity in England, earning herliving by writing those solid butstodgy novels, are covered by Ms.Sampson in a single chapter and acoda. This tends to reinforce thenotion, partly suggested by Mary’sown middle-aged romanticizing ofPercy, that her marriage to himhad been the central event of herexistence. But there are other rela-tionships apart from those withhusbands or books by which tomeasure the success of a life.Though Mary Shelley never againproduced anything to equal “Fran-kenstein,” which she referred to as“my hideous progeny,” she un-doubtedly succeeded—as, arguably,none of the other adults aroundher ever did—in being a loving andcommitted parent to her actualflesh and blood, resolutely sup-porting the only son left to her,also called Percy, by her literarylabors, scraping together themoney to see him through schooland university, and welcoming hiswife into their family when hemarried. This quietly heroicachievement makes her no less afeminist than her mother.
Ms. Lowry’s second novel, “DarkWater,” will be published this fall.
TheMother of FrankensteinHER ‘HIDEOUS PROGENY’ The composition of 19-year-old Mary Shelley’s classic tale about creating life coincided with her third pregnancy.
BRUCE
HUTCHISON
How exactly didan inexperiencedteenager createthemost enduringhorror story ever?And why could shenever match it?
LIKE ITS 8-foot creature, MaryShelley’s “Frankenstein” has hadlong legs since its publication200 years ago. She deemed it amere “ghost story,” but it has
since been rebranded as the first science-fiction novel and even “the first modernmyth,” according to the foreword of “TheNew Annotated Frankenstein” (Liveright, 352pages, $35), edited by Leslie S. Klinger. Thatlaurel, I would argue, belongs to Goethe’s1808 “Faust, Part One,” but in this volume’safterword, Anne K. Mellor makes a moredefensible claim: that Frankenstein is “themyth of modern science,” illustrating howhumanity’s attempts to harness nature canhave unintended and horrific consequences.
Indeed, the novel is more relevant thanever, given the scientific advances inbiotechnology and artificial intelligence thatmake Victor Frankenstein’s aim of creating anew species more than conceivable.“Frankenfoods” made from geneticallymodified organisms are just shelves awayfrom Franken Berry cereal. Both are signs ofhow universal Shelley’s myth has become.
There are manifold editions of the novel,more than 90 films with “Frankenstein” in thetitle, and innumerable Frankenstein tchotchkesto warm the heart and freeze the blood ofchildren and adults alike. Partly a fable aboutthe Industrial Revolution, “Frankenstein” itselfhas become a scholarly and commercialindustry, and a host of electrifying new workshas been issued to celebrate the bicentenary ofits publication. Mr. Klinger’s volume is awonderfully capacious introduction to the 1818edition and its historical, literary andbiographical contexts: As his annotationsdemonstrate, Shelley undercut this version’sstarkly existentialist themes when she revisedit in 1831. And subsequent interpreters wouldemphasize other aspects of her creation.
Christopher Frayling’s “Frankenstein: TheFirst Two Hundred Years” (Reel Art Press,208 pages, $39.95) is especially strong in its“visual celebration” of the iconography ofShelley’s creation. Half of the book’s glossypages are devoted to evocative images, somepublished here for the first time. Theyilluminate the unusual byways the work hastraveled in its mass-media incarnations. Wesee, for example, that Elsa Lanchester’sunforgettably bizarre hairstyle in “The Brideof Frankenstein” (1935) was inspired by the
ancient Egyptian bust of Nefertiti, displayedprominently in Berlin during the 1920s. Mr.Frayling’s detailed cultural history of“Frankenstein,” which comprises the book’sother half, is no less illustrative of “a creationmyth which works for today.”
Those seeking to delve further will findintelligent essays on the novel’s origins,appropriations and scientific relevance in“Frankenstein: How a Monster Became anIcon,” edited by physicist Sidney Perkowitzand filmmaker Eddy von Mueller (Pegasus,239 pages, $28.95). Bringing together the“two cultures” of art and science just asShelley did in her novel, this collection alsoprovides insights into this modern myth bythose who have contributed to its expansion,such as John Logan, creator of the brilliant“Penny Dreadful” TV series. Kathryn Harkup’s“Making the Monster: The Science BehindMary Shelley’s Frankenstein” (Bloomsbury,304 pages, $27) lucidly illuminates Shelley’sinvestment in the rapidly expandingknowledge of chemistry, biology andelectricity of her times, and reminds us of how“Frankenstein” helped inspire technologicaldevelopments, such as the pacemaker.
The last words should be left to NickGroom, whose introduction to “Frankensteinor ‘The Modern Prometheus’: The 1818 Text”(Oxford, 226 pages, $22.95) encapsulates thework’s many interpretations. He sees“Frankenstein” as, among other things, “acreation myth about the origin of stories.”This is precisely what modern myths do: openthe world to new questions, rather thanestablish answers. They are truly generative,an apt term for a novel that queries a selfishinventor, his damaged creature and science’sthreat to arrogate creation to itself.
Mr. Saler is the author of “As If: ModernEnchantment and the Literary Prehistory ofVirtual Reality.”
The FoundingMyth of theScientific Age
THE FRANKENSTEIN BOOKSHELF
The New Annotated FrankensteinEdited by Leslie S. Klinger
Frankenstein: The First TwoHundred YearsBy Christopher Frayling
Frankenstein: How a MonsterBecame an IconEditedbySidneyPerkowitz&EddyvonMueller
Making the Monster: The ScienceBehind Mary Shelley’s FrankensteinBy Kathryn Harkup
Frankenstein, or ‘The ModernPrometheus’: The 1818 TextEdited by Nick Groom
BY MICHAEL SALER
.
�
C10 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
BY MARILYN YALOM
RENÉ GIRARD (1923-2015) was inductedinto the FrenchAcademy in 2005.Many of us felt this
honor was long overdue, given hisinternational prominence as aFrench intellectual whose workshad crossed the boundaries of lit-erature, history, psychology, soci-ology, anthropology and religion.Today his theories continue to bedebated among “Girardians” onboth sides of the Atlantic. He isnow the subject of a comprehensivebiography by Cynthia Haven called“Evolution of Desire.”
The title is apt. A key concept inGirard’s philosophy is what hecalled “mimetic desire.” All desire,he argued, is imitation of anotherperson’s desire. Mimetic desiregives rise to rivalries and violenceand eventually to the scapegoatingof individuals and groups—a pro-cess that unites the communityagainst an outsider and temporar-ily restores peace. Girard believesthat the scapegoat mechanism hasbeen intrinsic to civilization fromits beginning to our own time.
My personal acquaintance withRené Girard began in 1957, when Ientered Johns Hopkins as a gradu-ate student in comparative liter-ature at the same time that hearrived as a professor in the de-partment of Romance languages.With his thick dark hair and leo-nine head, he was an imposingfigure whose brilliance intimidatedus all. Yet he proved to be gener-ous and tolerant, even when Iannounced that I was to have an-other child—my third in five yearsof marriage.
Whatever his private feelingsabout maternal obligations—he andhis wife, Martha, had childrenroughly the same age as ours—healways showed respect for myperseverance in the dual role ofmother and scholar. Under hisdirection, I managed to finish mydoctorate in 1963 and commenceda career as a professor of French.
Fast forward to 1981, when Gi-rard came to Stanford University. Ihad been a member of the Stanfordcommunity for two decades, firstthrough my husband, then on myown as a director of the Center forResearch on Women. On campus,Girard quickly became a hallowedpresence, a status he maintainedlong after his official retirement.
Among the people drawn intohis life at Stanford was Ms. Haven,who formed a close friendship withGirard that eventually inspired herto write “Evolution of Desire.” Hav-ing already written books on the
Nobel Prize-winning poets CzeslawMilosz and Joseph Brodsky, Ms.Haven is no stranger to the chal-lenges of presenting a great man’slife and ideas to the public. Hercarefully researched biography is afitting tribute to her late friend andone that will enlighten both spe-cialists and non-specialists alike.
Ms. Haven rightly advises read-ers unfamiliar with Girard’s workto begin by reading his 1961 opus“Deceit, Desire, and the Novel.”This book demonstrates how the“romantic lie” underlying thebelief in an autonomous self ispunctured by the “fictional truth”found in such writers as Cervantes,Stendhal, Flaubert, Dostoevsky andProust. In their novels, the pro-tagonist comes to realize that hisdominating passion is what Girardalternately calls “mimetic,” “me-diated” or “metaphysical.” Thefictive hero’s mimetic desire leadsto social conflict and personaldespair until he renounces theromantic lie and seeks some formof self-transcendence. Readers ofProust may remember Swann’sultimate reflection: “To think thatI ruined years of my life . . . for awoman who wasn’t even my type.”
Ms. Haven calls mimetic desirethe linchpin of Girard’s work,equivalent to Freud’s fixation onsexuality and Marx’s focus oneconomics. In her discussion ofGirard’s 1972 book “Violence andthe Sacred,” she traces a trajectoryfrom desire to conflict and ulti-mately to the scapegoating of en-tire groups. Think of the lynchingof African-Americans, the system-atic extinction of Jews in NaziGermany, the murder of Christiansin Muslim countries, and the cur-rent animus toward immigrants inEurope and America.
Ms. Haven credits the Frenchpsychiatrist Jean-Michel Oughour-lian with bringing Girard’s mimeticideas into the social sciences. Sherelates the amusing story of howMr. Oughourlian crossed the Atlan-tic impulsively in 1973 so as to findthe author of “Violence and theSacred” in New York. He was dis-mayed to discover that Girard wasnot in New York City but in far-away Buffalo at the State Univer-sity of New York, where the formerHopkins professor of French hadaccepted a position in the EnglishDepartment. When Mr. Oughour-lian and Girard finally met in Paris,they experienced a mutual sympa-thy that led to collaboration on“Things Hidden Since the Founda-tion of the World,” first publishedin French in 1978. The title, takenfrom the Gospel of Matthew, re-flected Girard’s increasing concernwith Christianity, which he saw asa source for ending history’s per-petual cycles of violence.
Ms. Haven’s ability to inter-weave Girard’s life with his publica-tions keeps her narrative flowingat a lively pace. For a man whowoke every day at 3:30 a.m. andwrote until his professorial dutiestook over, it would be enough forany biographer to focus on hisintellectual life, without linking histhoughts to a person ambulating inthe world. Fortunately, Ms. Havenportrays Girard as he interactedwith colleagues, students, friendsand family.
The list of his close associatesthroughout his long career atHopkins, Buffalo and Stanford isimpressive. It includes such distin-guished scholars and critics as JohnFreccero, Richard Macksey, EugenioDonato, Jean-Pierre Dupuy, MichelSerres, Hans Gumbrecht and Robert
Harrison. A complete list would runclose to 40 or 50 men.
Yes, all men. I can’t refrain fromnoting the exclusively male natureof Girard’s intellectual network, aswell as the predominance of men incompeting movements, like struc-turalism and deconstructionism.The chapter Ms. Haven devotes toa major conference organized byGirard and his Hopkins associatesin 1966 reads like an uproariousmovie script featuring the oversizeegos of the all-male cast, mostnotably the French psychoanalystJacques Lacan.
Even as Girard negotiated thepolitics of American academe andinternational rivalries, he drewstrength from his Catholic faith.Ms. Haven sympathetically re-counts his conversion experiencesin 1958 and 1959. At a time whenatheism was practically de rigueuramong French intellectuals, Girardcame out not only as a believer butalso as a spokesman for what hecalled the “truths of Christianity.”Among them, nonviolence headedthe list, for he believed that Jesus,unlike earlier scapegoats and sacri-ficial victims, offered a path tolasting peace. Ms. Haven adds herown eloquent words: “The way tobreak the cycle of violent imitationis a process of imitatio Christi, imi-tating Christ’s renunciation of vio-lence. Turn the other cheek, loveone’s enemies and pray for thosewho persecute you, even untodeath.” This message is as radicaltoday as it was 2,000 years ago.
Ms. Yalom is a senior scholar atthe Clayman Institute for GenderResearch at Stanford University.Her most recent book is “TheAmorous Heart: An Unconven-tional History of Love.”
BOOKS‘Our concern for victims is the secular mask of Christian love.’ —RENÉ GIRARD
Evolution of DesireBy Cynthia L. HavenMichigan State, 317 pages, $29.95
WhoWas René Girard?
NON Though atheism was de rigueur among French intellectuals, Girard came out as a believer.
ALAMY
SCIENCE FICTIONBY TOM SHIPPEY
FICTIONBY SAM SACKS
RACHEL CUSK’S breakoutwork, a trilogy of novels thatthe appearance of “Kudos”(Farrar, Straus and Giroux, 232pages, $26) now completes,draws its striking force andoriginality from what aspeaker in the first volume,“Outline” (2016), calls “thepower of silence.” The narratoris an English writer namedFaye, but Ms. Cusk’s ingeniousgambit is to make Faye apassenger in her own vehicle.The books are instead filled bythe monologues of friends andstrangers. We glimpse herthrough “a reverse kind ofexposition”—she’s a blank slatewhose shape becomesdiscernible as the detailsaround her are filled in.
The purpose of that processis to test “the human possibilityof self-creation,” as Faye puts itin “Kudos.” In “Outline,” Faye, amother of two, is re-enteringthe world after a traumaticdivorce. The novel takes placein Athens, where she is teachinga creative-writing course, andthe stories she listens torevolve around relationshipbreakdowns, writer’s block andother crises of identity. Thesecond volume, “Transit”(2017), returns to London,where Faye is renovating an oldapartment, and the storiesconcern people in the messymidst of rebuilding.
“Kudos” completes thenarrative arc, albeitambiguously. Set during a writ-ing conference in a hot-weatherEuropean country (it’s unnamedbut clues point to Portugal), itsstories offer variations on thethemes of arrival and success.To Ms. Cusk, art, parenthoodand marriage are analogousavenues of self-expression, sothe stories she relates cover anenormous breadth of experi-ence. One writer, who co-authors best-selling mysteries,has become rather smug abouthis professional fortunes;another, a critically laudednovelist, suffers from “intenseguilt” whenever he’s celebrated.On her flight Faye sits beside aman with an emotionally fragiledaughter who describes theredemptive moment when heheard her playing music in aschool concert. But for awoman at the conference,having a child marked aterminus, an irreversibleerasure of the self: “You surviveyour own death and thenthere’s nothing left to do excepttalk about it.”
The trademark style of thesemonologues is an aphoristicrefinement that makes it soundas though each speaker hassuddenly begun channelingOscar Wilde. “History goes overthe top like a steamroller,” onewriter says, contemplating
forms of suffering, “whereaschildhood kills the roots.” Awoman on an all-female panelof intellectuals laments that“when a group of women gettogether, far from advancingthe cause of femininity, theyend up pathologising it.”
The cause of femininitypoints us back to Faye and theformidable power she wieldsfrom her ongoing silence.Toward the end of “Kudos,” one
of Faye’s interlocutors discussesthe artist Louise Bourgeois,whose inimitable paintingsreflected her embrace of“female invisibility.” Ms. Cuskseems to tacitly endorse thatmethod. In “Outline,” Faye’sinvisibility was a result ofpersonal catastrophe, but in“Kudos” it has transformed intoa positive virtue, a stratagemfor artistic freedom. Fayemakes others bear the weightof self-exposure while sheremains undescribed andindefinable.
This important trilogy, then,through its eloquent polyphony
of voices and opinions, arrivesat an idea of feminist art inopposition to the confessionalmode that has long been inascendance. Ms. Cusk’s toolsare ambivalence and elusive-ness—or, to rearrange JamesJoyce’s terms of independence:exile, cunning and silence.
James Wood’s novel “Up-state” (Farrar, Straus & Giroux,214 pages, $26) enacts a familydrama in the poky college townof Saratoga Springs in northernNew York. The dynamics of thismodern-day pastoral are sim-ple. Alan Querry, a 68-year-oldEnglish property developer, hastraveled to America to see hisdaughter Vanessa, a philosophyprofessor, after an email fromher boyfriend hints that shemay be suffering fromdepression and in danger ofharming herself. Joining him ishis younger daughter, Helen, anoutspoken Sony music execu-tive and the soulful yin toVanessa’s intellectual yang.
Mr. Wood is perhaps theleading book critic in theEnglish-speaking world, andhe’s clearly aware of the preju-dices that precede novels byfamous critics. Such books, itis assumed, will be talky andanalytical, essentially essaysthinly disguised as fiction. Thiswas a fair characterization ofMr. Wood’s first novel, “TheBook Against God,” from 2003,
but with “Upstate” he haschecked his natural urge tohold forth by couching most ofthe book in the point of viewof Alan, a practical-mindedbusinessman who says of him-self, “I don’t think about lifetoo much.”
It has to be said: He’s a bitboring. In contrast to Mr.Wood’s trenchant literaryessays, Alan’s observations areprosaic and overfamiliar.Manhattan is like “heaven andhell combined, infernal butglittering with lights,” hemuses, as every tourist hasdone before him.
But what the novel loses ininsight it gains in feeling. Alanis, above all else, a fond andfretful father, and “Upstate”touchingly explores the conun-drum of being a parent toadults. What duties does thatchanged role demand? “Thoughyour child was only briefly achild, you never quite got usedto seeing her no longer one,”Alan thinks about Vanessa:“there she was—how strange—aformidable grown-up.” Littlehappens in this novel—toolittle, I think—but there isgenuine sweetness in its lack ofpretense, its tender insularity.What “extraordinary powerfamily had,” Alan marvels, “toblot out all other consider-ations, all other desires anddissatisfactions.”
TheMonologues of Friends and Strangers
THIS WEEK'S BOOKS
KudosBy Rachel Cusk
UpstateBy JamesWood
JULIA FINE’S novel “WhatShould Be Wild” (Harper, 350pages, $26.99) is set in theborderlands between myth andfairy tale, between life anddeath. Her heroine, Maisie, wasborn from a dead mother. In away Maisie is like King Midas.
Everything she touches dies, if alive, orcomes back to life, if dead. As a child,clearing some weeds from her garden, shetouches a leaf, and sees “dead gray eat itsway across the green.” She has to be walledoff from the world, a barrier of thornsbetween her and the wood outside, just likeSleeping Beauty, all human contact carefullymonitored, just like Rapunzel.
But the wood outside is even stranger. In itlive—are they alive?—her female ancestors,all of them images of ancient cruelty inflictedon women. “Nothing promises revival like afairy tale,” says Ms. Fine, but can even Maisierevive or appease these angry ghosts? Evendeeper in the wood, there is another powerstirring, and Maisie’s well-meaningprotectors, father Peter the anthropologistand lover Matthew the historian, have noanswer to it in theory or in practice.
The Brothers Grimm gave us the fairytales; many years later Tanith Lee gave us“Tales From the Sisters Grimmer.” In thisastonishing debut, Ms. Fine bids fair to be theSister Grimmest.
It’s the spirits that make Sarah BethDurst’s world of Renthia distinctive in “TheQueen of Sorrow” (Harper Voyager, 432pages, $21.99). The idea that nature isanimate is all but universal, of course. ButMs. Durst’s spirits aren’t like the flimsyoreads and dryads of Greek myth. They arenot in harmony with humans, but bitterlyhostile. The big ones bring avalanches,hurricanes and volcanoes, the little onespractice petty malice. They can all becontrolled only by queens—and if a queendies without an heir, it’s disaster.
Two previous volumes set the stage forthe climax in “The Queen of Sorrow,” butonce again it’s not the standard Last Battleor military apocalypse. Queen Naelin’schildren have been kidnapped, QueenDaleina has to go to the rescue, with whatspirits she can muster against those ofQueen Merecot, the kidnapper. Here it’s notwar between kings, but agreement betweenqueens that brings peace. The Renthiatrilogy stands old beliefs, and even oldmyths, on their heads. Ms. Durst has givenus a refreshing, provocative and ultimatelyconvincing remake of modern fantasyconventions. The wonder is that we ever sawthings the other way round.
Fables RemadeFor theModern Age
THIS WEEK'S BOOKS
What Should Be WildBy Julia Fine
The Queen of SorrowBy Sarah Beth Durst
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C11
York state legislature, in Albany, aplace he found “opaque and infuriat-ing.” Politicians, including New YorkGov. Morgan Lewis and Hosack’sclose friend DeWitt Clinton, backedthe project, only in the end to betrayit. Petitions were drawn up. The tell-ing of this is dry stuff, yet Ms. John-son holds our interest as Hosackwheedles and cajoles, desperate tokeep his beloved garden alive.
At last, Ms. Johnson writes, Elgincollapsed for lack of funding, just as itwas “beginning to make its mark onAmerican medicine.” In the fall of1812, a carriage rolled up near the siteand a young civil servant emerged,there to map out a grid of newstreets. It was the garden’s deathknell. The “Middle Road” on which itsfront gates stood would soon be re-named Fifth Avenue.
As his dreams for the gardenfaded, Hosack wove himself everdeeper into the fabric of his nativecity. Described by some contempo-raries as “the first citizen of New-York,” the doctor could hardly walk aManhattan street without passersbystopping to pay their respects. Anoted bon vivant, he for years held alegendary Saturday-night salon at hishome near Wall Street, where suchnotables as Washington Irving andJohn Jay turned up. Letters fromaround the globe, addressed only to“Dr. Hosack, New York,” found theirway to his door.
Hosack’s accomplishments, earlyand late, are so numerous that a biog-raphy of the man risks becoming a
spreadsheet, fact-heavy and unread-able. Yet so many deserve mention.He had a string of medical innova-tions to his credit, including being thefirst physician to tie off the femoralartery in the treatment of aneurisms.He was also the first in the UnitedStates to treat a swelling of the scro-tum by injection—a technique he’dlearned in Britain and the only onethat alleviated that painful condition.Perhaps most dramatically, in 1795, asyellow fever closed in on New York,he faced off against his medical col-leagues by insisting that the disease—which had ravaged Philadelphia twoyears earlier, reducing its populationby a third—was contagious and couldbe curtailed by general hygiene andcleaning up the city’s filth, particu-larly around its docks. While he waswrong in the first instance—the dis-ease was caused by mosquitoes,something that wouldn’t be under-stood for another half-century—hewas correct in the latter. Even so, theactions he recommended destroyedmosquito breeding grounds, withmany lives saved as a result.
Ms. Johnson, an associate profes-sor of urban planning at HunterCollege and an authority on botanicgardens, never allows her subject’smany achievements to weigh downher narrative. She writes trippingly,with engaging fluency and wit. Shehas a lovely way of conjuring up earlyNew York and its denizens—the work-ers calling out as they unload cargo atthe docks; the gentlemen crowdinginto the Tontine Coffee House for the
news of the day. The book’s botany-related passages are particularlyvivid. The author writes of plantsdelightedly, precisely—as Hosack him-self might have done. The lovingly de-scribed “tall grass called Job’s tears(Coix lacryma) for the pearly littletear-shaped grains that grew at theend of its stalks” is but one of manysuch examples.
The book also offers fascinatingglimpses of early New Yorkers re-sponding to world events, such aswhen, at the outbreak of the War of1812, the city’s residents fall “into afrenzy of fear and recrimination.”Who knew that, at the time of theFrench Revolution, sympatheticcrowds of Democratic-Republicansparaded through Manhattan singingthe “Marseillaise” and sporting thered liberty caps favored by the revo-lutionary mobs across the Atlantic?On a much smaller scale, the city’sresidents fumed—Hosack prominentamong them—when a mastodon fossilexcavated in the Hudson Valley wasspirited across state lines for theglory of that rival city, Philadelphia.
After the garden’s demise, Hosackcontinued working at his usual, fever-ish pace. In 1816, he was named aFellow of the Royal Society, an almostunheard of honor for an American;other accolades, including an honor-ary degree from Princeton, rolled in.Toward the end of his life—he died ofa stroke, at age 66, in 1835—Hosackmarried an immensely wealthywoman (he had been twice a wid-ower) and became the proprietor ofan estate in Hyde Park-on-Hudson,where he—no surprise there—was“captivated by every aspect of farm-ing and country living.”
By then, New York City was firmlyon the map. In a gracious letter toHosack, Charles Willson Peale, theartist, naturalist and very personifica-tion of Philadelphia high culture, con-ceded that the rival city to the northwas now more “advanced in learning,arts & science” than his own. For theambitious Dr. Hosack, it must havebeen sweet vindication.
Ms. Rowlands is the author of “ADash of Daring,” a life of fashioneditor Carmel Snow. She is agreat-great-great-great-great-grandniece of David Hosack.
in his mind and decided it suited himperfectly.” The city, in a sense, washis to create. At a time when “overtambition was frowned upon,” he kepta “breakneck professional pace.”While meeting the demands of a bur-geoning medical practice and a pro-fessorship at Columbia, he also helpedconceive, found, lead or improvemany institutions that exist to thisday, including the New-York HistoricalSociety, the New-York HorticulturalSociety, the American Academy ofFine Arts, Bellevue Hospital and themedical school that would becomeColumbia University’s College of Phy-sicians and Surgeons.
Hosack’s greatest achievement,however, was an entity that has dis-appeared altogether and been largelyforgotten—the Elgin Botanic Garden,which he founded, in 1801, on a hilly,wooded 20-acre area of Manhattan,now the site of Rockefeller Center.Named after Hosack’s father’s birth-place in Moray, Scotland, it was thefirst public garden in the UnitedStates, the first research institutiondevoted mainly to the cultivation andstudy of native plants, and a scientificlaboratory of vital importance to thefuture of America. In the 1740s, Ben-jamin Franklin had despaired thatAmerica’s “Mountains and Swamps”were filled with plants “whose Virtuesand proper Uses are yet unknown toPhysicians.” Until Hosack, little re-search had been done on the medici-nal possibilities of American flora.
Hosack purchased the land forElgin from the City of New York forwhat today would be about $100,000.He did so parcel by parcel, with hisown money, through 1810. His planwas to develop it, manage it as aworking farm and horticultural class-room, and eventually sell it back tothe city as a public trust. By the sum-mer of 1803, he had begun to build a
ContinuedfrompageC7
DavidHosack’sAmericanEden
NEW-YORK LINNEANUM Elgin Botanic Garden, ca. 1810, artist unknown.
ALAMY
“NO TWO PEOPLE, even if they are standingnext to each other, ever see exactly the samerainbow, and each eye of each observeractually sees a different one,” David ScottKastan writes in “On Color” (Yale, 254 pages,$28), a sparkling and erudite meditation onthe properties and meanings of the hues thatsurround us. “And, in fact, the rainbow isconstantly being re-formed as the lightstrikes different water droplets. The rainbowis not an object; it is a vision—a visiondependent upon sunlight, water, geometry,and a sophisticated visual system. Like coloritself, even explained, it remains a wonder.”
Written in collaboration with artistStephen Farthing, “On Color” isn’t aimed atyoung readers—or at least not at any but themost precocious. For teenagers and adults,though, it offers a rich perspective that will,in the case of parents, undoubtedly informthe way they talk about color when looking atart and illustration with their children. So thebook is a win for everyone, and gorgeous tolook at, too, with its photographs andreproduced paintings (see a detail fromMonet’s “Water Lilies,” right).
Over 10 chapters, each inspired by adifferent color (along with color’s fellowtravelers of black, white and gray), the authorsexplore the ways that we see color and howour perceptions have varied across time andcultures. Like the world, our language andsymbolism are saturated with color. AnAmerican turns green with envy; a Hungarianturns yellow. A “blue” movie in English is“green” in Spanish and “pink” in Japanese.Societies have shaken under “green” and“orange” revolutions, and, of course, for muchof the 20th century the revolutionary east was“red.” Until the late 16th century, with theintroduction into Europe of the citrus fruit,English speakers had no name for the color“orange” (in the 1390s, Chaucer had to describea fox having “color betwixe yelow and reed”).In the late 19th century, scandal swept theFrench art world at the Impressionists’distasteful use of the color violet (“their retinaswere diseased,” sniffed a prominent critic).Drawing from art, science and semiotics, with
fascinating side trips into politics and history,Messrs. Kastan and Farthing summon a full-spectrum discussion of a phenomenon aswondrous as it is commonplace.
The marvel of color and its varieties comesto young children in two snug little books byJames Fulford and Tamara Shopsin. The first,“These Colors Are Bananas” (Phaidon, 28pages, $14.95), widens the idea of the naturalcolor of natural things. We think of clouds asbeing white or gray, but they can also be redor gold or blue. Fire, also, burns blue, as wellas red and yellow and lemony-green. “Yourhand is a color, too,” the authors note on thebook’s last page, which has a cutout to allowchildren to see their own skin as a daub onthe human palette.
The second Shopsin and Fulfordcollaboration, “Find Colors” (Phaidon, 28pages, $14.95), is a scavenger hunt shaped likea board book. There’s a color-familiar shapecut out of every other page, which childrenare encouraged to fill by locating a certain
color in the world around them. For “findpurple,” there’s a void shaped like a bunch ofgrapes, and “find pink” features three squigglycutout worm silhouettes. The book encourageschildren to become color hunters, prowlingand pouncing and, we can hope, developing anappreciation for the hues they discover.
Something of the same sort seems at firstto be happening in the enigmatic andcomplicated pages of “The Forest”(Enchanted Lion, 58 pages, $25.95). There’sno color to begin with, just blank creamypaper embossed with the head and shouldersof a baby, with little cutouts for the eyes andnostrils. “It is an enormous, ancient forestthat has not yet been fully explored,”Riccardo Bozzi writes (his words translatedfrom the Italian by Debbie Bibo). On the nextpage we see tentative green fronds: “In thebeginning, the forest is a grove of young pinetrees. It is usually free of danger and quitefun to wander through.”
As the pages turn, we alternate between
YALE
UNIVER
SITY
PRESS
more blank embossed portraits and evermore lush, jungly, colorful paintings, aschildren explore the forest, paying noattention to time. As the foliage thickens, wesee that the figures moving in it are growingup. The faces in the portraits, too, are gettingolder, and the forest, we come to realize, islife itself. Like Thomas Cole with his four“Voyage of Life” paintings, illustrators
Violeta Lopíz and Valerio Vidali are leadingus through the cycle of human experience,from our “salad days,” as Shakespearedescribed them, when we are “green,”through the autumnal shades of old age to,perhaps, a place of renewal beyond.
Writer Minh Lê and illustrator Dan Santatbring us full circle in a different and moreimmediately sentimental way in “DrawnTogether” (Disney Hyperion, 40 pages,$17.99), a picture book aimed at 4- to 8-year-olds that will reverberate with readers whoare considerably older. Here, too, vivid colorpredominates: A glow emanates from thepages as a little boy gets dropped off at hisgrandfather’s house. From the start, we see achasm between man and boy that is not somuch generational as cultural and linguistic.The boy speaks English, the grandfatherspeaks Vietnamese, and the two of themappear to have no vocabulary in common. Butwhen the boy retreats to his markers andpaper to escape the awkwardness, hisgrandfather surprises him by picking up penand ink of his own and “revealing a worldbeyond words. And in a flash,” the boy tellsus, “we see each other for the first time.” Intheir dynamic drawings—the old man’s inblack and white and the boy’s in color—thetwo find a joyful place of encounter wherewords are superfluous.
TheWonderful World of Color
CHILDREN’S BOOKSBYMEGHAN COX GURDON
THIS WEEK'S BOOKS
On ColorByDavid Scott Kastanwith Stephen Farthing
These Colors Are BananasBy Jason Fulford & Tamara Shopsin
Find ColorsBy Tamara Shopsin & Jason Fulford
The ForestBy Riccardo Bozzi,illustrated by Violeta Lopíz & Valerio Vidali
Drawn TogetherByMinh Lê, illustrated by Dan Santat
BOOKS‘Color is my daylong obsession, joy and torment.’ —CLAUDE MONET
great greenhouse, one of the largestin all of North America. In June ofthat year, he gave a spirited lectureat Columbia, which was then locatedin Park Place. He explained that, justas he was teaching medical studentsat that college the rudiments of sur-gery, he would soon also be trainingmedical botanists at Elgin. He alsospoke, writes Ms. Johnson, “aboutthe thousands of plants he was col-lecting from around the world—medicinal, agricultural, commercial,and ornamental. . . . He intended tocollect every known species native tothe continent, and . . . would safe-guard specimens of each one at thegarden. He reminded his audience ofthe critical medicines and crops thenation was forced to import eachyear from ‘distant quarters of theglobe.’ These very plants, Hosackpromised, would soon be growingless than four miles north of wherethey now sat.”
“Some of the earliest systematicresearch in the United States on thechemical properties of medicinalplants” took place at Elgin, Ms. John-son notes. Thomas Jefferson, WilliamBartram, Meriwether Lewis and otherluminaries “sent Hosack plants andseeds for his garden and lavishedpraise on him,” while visiting Euro-pean scientists, such as Baron Alexan-
der von Humboldt, François AndréMichaux and Alire Raffeneau Delile,botanist to Emperor Napoleon, mar-veled at the range of specimens hehad assembled.
The grounds grew incrementally,by the acre and by the building. Butby 1805, Ms. Johnson writes, “half ofthe Elgin Botanic Garden was stilltrapped inside Hosack’s head, theother half was a mess of clay potsand manure.” He devised manyschemes to keep the garden afloatand moving ahead. For years hepleaded with Columbia to fund Elginfor pedagogic purposes. For a timethey did. Later, he turned to the New
Hosack hosted JohnJay,WashingtonIrving and others athis legendary salon.
.
�
C12 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
BOOKS‘If the nineteenth century was the age of the editorial chair, ours is the century of the psychiatrist’s couch.’ —MARSHALL MCLUHAN
devoted to the abolition of slavery.No matter how many times Oniontries to escape the old man, he findshimself drawn inexorably into thespiraling events at Harpers Ferry,much like Melville’s Ishmael, circlingin the wake of the sinking Pequod.
The Signature of All ThingsBy Elizabeth Gilbert (2013)
5 Born in Pennsylvania in thefirst days of the 19th century,Elizabeth Gilbert’s heroine,Alma Whittaker, encapsulates
that era’s insatiable hunger tounderstand the natural world—tomake legible “the signature of allthings.” Because her father hasmade a fortune in botanical drugs,Alma has the time and resources todevelop into a first-rate scientist,although as a woman she is unableto travel freely, and her world, anecho of Emily Dickinson, “had scaleditself down into endless inches ofpossibility.” Nevertheless, Alma’sstudy of mosses enables her toarrive independently at a theory ofnatural selection like that of Darwin.Along the way, there is anunconsummated marriage, a trip toTahiti and a meeting with AlfredRussel Wallace, the historical co-discoverer of natural selection. Ms.Gilbert’s prose has a kind ofevolutionary development of its ownas it sprawls in unexpecteddirections, propelled by theexcitement of scientific discoverythat is one of the enduring legaciesof the 19th century.
HardcoverNonfictionTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
Magnolia Table 1 1JoannaGaines&MarahStets/WilliamMorrow&Company
The RestlessWave 2 NewJohnMcCain andMark Salter/Simon & Schuster
The Soul of America 3 2JonMeacham/RandomHouse
How to Change YourMind 4 3Michael Pollan/Penguin Press
Barracoon 5 6Zora Neale Hurston/Amistad Press
TITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
Facts and Fears 6 NewJames R. Clapper/VIking
12 Rules for Life 7 7Jordan B. Peterson/RandomHouse Canada
The Subtle Art of Not Giving a F*ck 8 8MarkManson/Harper
AHigher Loyalty 9 5James B. Comey/Flatiron Books
Three Days inMoscow 10 4B. Baier & C.Whitney/WilliamMorrow& Company
HardcoverFictionTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
TheOutsider 1 NewStephen King/Scribner Book Company
Oh, the Places You’ll Go! 2 1Dr. Seuss/RandomHouse Books For Young Readers
The Cast 3 3Danielle Steel/Delacorte Press
The Trials of Apollo Book Three 4 5Rick Riordan/Disney-Hyperion
The Fallen 5 6David Baldacci/Grand Central Publishing
TITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
An Elephant & Piggie Biggie! 6 10MoWillems/Disney-Hyperion
DogMan and Cat Kid (DogMan 4) 7 7Dav Pilkey/Graphix
The 17th Suspect 8 4JamesPatterson&MaxinePaetro/Little,BrownandCompany
War Storm 9 2Victoria Aveyard /Harper Teen
BeachHouse Reunion 10 NewMary AliceMonroe/Gallery Books
Methodology
NPD BookScan gathers point-of-sale book datafrom more than 16,000 locations across theU.S., representing about 85% of the nation’sbook sales. Print-book data providers include allmajor booksellers (now inclusive of Walmart)and web retailers, and food stores. E-book dataproviders include all major e-book retailers. Freee-books and those sold for less than 99 cents
are excluded. The fiction andnonfiction lists in all formatsinclude adult, young adult, andjuvenile titles; the business listincludes only adult titles. The
combined lists track sales by title across allprint and e-book formats; audio books areexcluded. Refer questions [email protected].
NonfictionE-BooksTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
The Perfect Horse 1 –Elizabeth Letts/RandomHouse Publishing Group
The RestlessWave 2 NewJohnMcCain andMark Salter/Simon & Schuster
Facts and Fears 3 NewJames R. Clapper/Penguin Publishing Group
Bad Blood 4 NewJohn Carreyrou/Knopf Doubleday Publishing Group
Educated 5 5TaraWestover/RandomHouse Publishing Group
I’dLiketoApologizetoEveryTeacher... 6 –Tony Danza/Crown/Archetype
The Soul of America 7 7JonMeacham/RandomHouse Publishing Group
The Subtle Art of Not Giving a F*ck 8 6MarkManson/HarperCollins Publishers
Gold Run 9 –Robert Pearson/Casemate
Building A Storybrand 10 –DonaldMiller/HarperCollins Leadership
NonfictionCombinedTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
The RestlessWave 1 NewJohnMcCain andMark Salter/Simon & Schuster
Magnolia Table 2 1JoannaGaines&MarahStets/WilliamMorrow&Company
The Soul of America 3 3JonMeacham/RandomHouse
Facts and Fears 4 NewJames R. Clapper/Viking
How to Change YourMind 5 2Michael Pollan/Penguin Press
12 Rules for Life 6 8Jordan B. Peterson/RandomHouse Canada
The Subtle Art of Not Giving a F*ck 7 7MarkManson/HarperOne
Barracoon 8 6Zora Neale Hurston/Amistad Press
Bad Blood 9 NewJohn Carreyrou/Knopf Publishing Group
AHigher Loyalty 10 5James Comey/Flatiron Books
FictionE-BooksTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
TheOutsider 1 NewStephen King/Scribner
Rogue Royalty 2 NewMeghanMarch/MeghanMarch
Rebel Heart 3 NewVi Keeland & PenelopeWard/PenelopeWard
The Red Ledger 4 NewMeredithWild/MeredithWild
Fall Of Giants 5 –Ken Follett/Penguin Publishing Group
Marriage of Inconvenience 6 –DebbieMacomber/MIRA Books
BeachHouse Reunion 7 NewMary AliceMonroe/Gallery Books
Buried Prey 8 –John Sandford/Penguin Publishing Group
The Fallen 9 5David Baldacci/Grand Central Publishing
Step on a Crack 10 –James Patterson/Little, Brown and Company
FictionCombinedTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
TheOutsider 1 NewStephen King/Scribner Book Company
Oh, the Places You’ll Go! 2 3Dr. Seuss/RandomHouse Books for Young Readers
The Fallen 3 7David Baldacci/Grand Central Publishing
The 17th Suspect 4 6JamesPatterson&MaxinePaetro/Little,BrownandCompany
The Cast 5 2Danielle Steel/Delacorte Press
Princess 6 4James Patterson/Grand Central Publishing
BeachHouse Reunion 7 NewMary AliceMonroe/Gallery Books
Rogue Royalty 8 NewMeghanMarch/MeghanMarch
The Trials of Apollo Book Three 9 8Rick Riordan/Disney-Hyperion
Rebel Heart 10 NewVi Keeland & PenelopeWard/PenelopeWard
HardcoverBusinessTITLEAUTHOR / PUBLISHER
THISWEEK
LASTWEEK
StrengthsFinder 2.0 1 1TomRath/Gallup Press
TotalMoneyMakeover 2 2Dave Ramsey/Thomas Nelson
Bad Blood 3 NewJohn Carreyrou/Knopf Publishing Group
Emotional Intelligence 2.0 4 3Travis Bradberry & Jean Greaves/TalentSmart
The Five Dysfunctions of a Team 5 6Patrick Lencioni/Jossey-Bass
The Energy Bus 6 8Jon Gordon/Wiley
Purposeful 7 NewJennifer Dulski/Portfolio
ExtremeOwnership 8 5JockoWillink and Leif Babin/St. Martin’s Press
TheGraduate Survival Guide 9 4Anthony ONeal with Rachel Cruze /Ramsey Press
Principles: Life andWork 10 7Ray Dalio/Simon & Schuster
Best-Selling Books | Week Ended May 27With data from NPD BookScan
BY TOM NOLAN
ALAMY
CUSTOMERS GO to Harriet“Hal” Westaway, a 21-year-old tarot-card readerwith a booth on theBrighton Pier, in hopes of
getting a peek into their futures. Butit’s Hal’s own future that seemshexed: She’s in hock to a loan sharkwho has given her seven days to payup—or else. In Ruth Ware’s “TheDeath of Mrs. Westaway,” fate seemsto deal Hal a trump card when alawyer’s letter arrives informing herthat she’s a beneficiary in the will ofher just-deceased grandmother, aCornwall woman who has left asizable estate.
This must be a mistake: Hal’sgrandparents have been dead foryears. Yet the lawyer has all Hal’sparticulars and expressesno doubts. Given herdire financialstraits, Hal re-solves to attendthis supposedrelative’s funeraland then acceptwhatever bequestcomes her way—hoping againsthope that she’ll es-cape prosecutionfor fraud.
When the willis read, it’s an-nounced thatHal—to the angerof her alleged re-lations—inher-its the bulk ofthe estate: a spooky,remote, mansion where Haland the rest of the family membersare all temporary guests. Hal soonintuits that someone wants her outof this family picture, especiallywhen, coming down the stairs onenight from her attic room, she tripson a deliberately strung trap, a haz-ard that disappears before she canshow it to the others.
The circumstances surroundingHal’s inheritance suddenly seemeven more mysterious. But the mo-tive for harming her, Hal believes,is not simple greed. With her inqui-ries, Hal threatens to expose long-hidden secrets in this dysfunctionalfamily’s past—possibly related toHal’s own mother, who died in ahit-and-run accident just before Halturned 18. Using job tradecraft asinspiration, Hal tells herself to take
The Deathof Mrs. WestawayBy Ruth WareScout Press, 368 pages, $26.99
Fall of AngelsBy Barbara CleverlySoho, 372 pages, $26.95
to end, as swiftly as possible, thesuffering caused by the Civil War.
Pym: A NovelBy Mat Johnson (2011)
3 Although it takes place in the21st century, Mat Johnson’snovel—part academic spoof,part adventure tale—is a riff
on Edgar Allan Poe’s flawed butfascinating “The Narrative of ArthurGordon Pym of Nantucket.” Mr.Johnson’s narrator, an African-American professor denied tenure ata “historically white college”because he refuses to serve on theDiversity Committee, discovers thatPoe’s wildly improbable novel isbased on actual events. In a series ofbizarre and hilarious episodes, hewinds up in Antarctica, following thefootsteps of Poe’s titular characterand ultimately discovering a groupof giants at the South Pole. Mr.Johnson has arguments to makeabout race, literature and theacademy, but none is as compellingas the sheer verbal energy of hisnarrative. That’s especially true ofhis lively, extended commentary onPoe’s strange account of shipwrecks,mutinies and cannibalism: a “bookthat at points makes no sense, getswrong both history and science, andyet stumbles into an emotional truthgreater than both.” No wonder Poe’spotboiler inspired Herman Melville,Jules Verne and H.G. Wells.
The Good Lord BirdBy James McBride (2013)
4 One of American history’sseminal events istransformed into rowdycomedy in James McBride’s
“The Good Lord Bird,” a NationalBook Award winner that recountsthe experiences of centenarianHenry Shackleford, nicknamedOnion, who as an escaped slave inhis early teens will disguise himselfas a girl and become “the onlyNegro to survive . . . John Brown’sraid on Harpers Ferry, Va., in 1859.”Mr. McBride, a musician as well as anovelist, locates in Onion’s voice amelody that combines Huck Finn’sjaunty vernacular with the morejaundiced tones of an elderly blackman—Onion tells his story at age103—aware that his racial identity isfreighted by history. In Onion’stelling, John Brown is a wild-eyedzealot, a cartoonish madman whotalks like Yosemite Sam and praysfor hours on end but whose madnessand prayers are nevertheless
MarchBy Geraldine Brooks (2005)
1 Geraldine Brooks’s PulitzerPrize-winning novel doesn’t somuch rewrite Louisa MayAlcott’s “Little Women” as it
assesses the bloody Civil War thatwas that novel’s obscured backdrop.Told from the perspective of theabsent Mr. March, the father of the“little women” and a ferventabolitionist who survives the Battleof Ball’s Bluff in Virginia in 1861,Ms. Brooks’s novel is a meditationon the conflict between theidealism that prompted the war andthe inevitable horrors thatproceeded from it. Sometimes thenovel verges on allegory—Marchjust happens to meet a blackwoman named Grace whom he hadsecretly loved in his youth—but Ms.Brooks’s language is a freshet ofpoetry, and her precise depictionsof the antebellum South, whereMarch traveled as a young peddler(much like Amos Bronson Alcott,Louisa May’s father and the modelfor the titular hero), are like a viewof the era through an old brassmicroscope. Like other 21st-centuryCivil War novels—E.L. Doctorow’s“The March” among them—Ms.Brooks’s “March” captures anAmerican landscape empty, wildand latent with violence.
Lincoln in the BardoBy George Saunders (2017)
2 Nothing in George Saunders’sdistinguished career as ashort-story writer quiteprepares us for the tour de
force that is “Lincoln in the Bardo,”which isn’t so much a narrative asan oratorio for disembodied voicesfrom beyond the grave. The time isFebruary 1862; the setting is the OakHill Cemetery, in Georgetown, wherePresident Lincoln’s recentlydeceased 11-year-old son, Willie, hasbeen interred. Composed ofhundreds of ghostly voiceslamenting their lives’ missedopportunities (bardo is the Buddhistequivalent of purgatory), the novelmostly focuses on Lincoln himself,who is austere in his grief andburdened with the responsibilities ofa conflict unprecedented in itsviolence (the Battle of Shiloh is justtwo months away). Mr. Saunders’sgenius is to show us Lincoln’sdeveloping sense that, while“everyone labored under someburden of sorrow,” his ownmelancholy “must be defeated,” atleast to the extent that he may work
FIVE BEST 21ST-CENTURY NOVELS ABOUT THE 19TH CENTURY
Randall FullerProfessor of 19th-century American literatureand author of ‘The Book That Changed America’
things “with the slow, measuredpace of a reading. She had to turneach card as it came.” And at theend of Ms. Ware’s captivating andeerie page-turner, Hal finds herselfsaying “the last thing she had in-tended. The truth.”
Another young Englishwomansuspiciously trips down a stair-case—this one backstage at a uni-versity concert hall—in BarbaraCleverly’s lively “Fall of Angels,” thefirst book in a new series featuringDetective Inspector John Redfyre, arising star with the Cambridgepolice. The year is 1923, and thewoman in distress is a trumpet vir-tuoso at a time when female musi-cians are not commonly permittedon U.K. stages. It seems that thisbold horn player has provoked theire of a stage-door Igor not at alleager to see chauvinistic conven-tions come tumbling down.
Fortunately present when thetrumpeter has her tumble—notfatal—is Redfyre, who quickly takescharge of the scene. Alas, the in-spector is miles away when a secondwoman is attacked that night and herstrangled corpse thrown into a river.The two women were acquainted, it
seems: Both weremembers of adiscreet so-rority pro-moting a “newand muscledbrand of femi-nism,” one thatwould use theforces of mod-ern media toshape publicopinion in favorof their post-suffragette goals.The maniac-at-large is aware ofthis savvy groupand seems benton eliminating itstalented sisters
one by one.In determined opposition
to this shadowy murderer is the re-doubtable Redfyre, a Great War vet-eran with a handsome face that dis-plays “distress, concern, enquiry andresolve” in the presence of violent in-jury. As Redfyre himself puts it: “Ipick up the dead and the desecrated.The battered, the poisoned and thestrangled. . . . I mourn for them. AndI vow to find and deal with the personwho has killed them.”
The inspector’s earnestness iswell-tempered by a good deal of witand charm. And Ms. Cleverly displaysa sure knowledge of the personalattitudes, social conditions, scienceand slang of a fascinating transi-tional period in history.
Mr. Nolan reviews crime fiction forthe Journal.
Turning Each CardAs It Comes toHer
BATTLEGROUND A detail fromAlfred Wordsworth Thompson’s‘Cannonading on the Potomac’(1861), depicting soldiers on theeve of the Battle of Ball’s Bluff.
THEWHITEHOUSE
HISTO
RICA
LASSOCIAT
ION
.
�
THEWALL STREET JOURNAL. * * * * Saturday/Sunday, June 2 - 3, 2018 | C13
s
Get the solutions to this week’s Journal WeekendPuzzles in next Saturday’s Wall Street Journal.Solve crosswords and acrostics online, get pointerson solving cryptic puzzles and discuss all of thepuzzles online atWSJ.com/Puzzles.
A. Current indicator,of a sort (2 wds.)
B. The U.S.’s RonaldReagan or GeorgeH.W. Bush, e.g.(2 wds.)
C. Obstinate orinscrutable person(2 wds.)
D. Sandy in 2012,for one
E. Solid whosegeometric dualis the cube
F. Beatles titlecharacter of whomit’s asked “Isn’t he abit like you andme?” (2 wds.)
G. They may helpwhen studyingdifferent cultures(2 wds.)
H. It began as theGreatWestAerodrome
I. Painter whose“Music in theTuileries Gardens”hangs in London’sNational Gallery(2 wds.)
J. Marks formisconduct
K. At a very highlevel; extremelyawesome (3 wds.)
L. Landlocked Asiannation surroundedby five otherlandlocked nations
M. Abundant
N. Easy-listeningmusic genrereminiscent ofSinatra andMancini
O. Right of agovernment overthe private propertyin its jurisdiction(2 wds.)
P. Miniature human
Q. Person of refinedtaste
R. Peninsula namedfor a Portugueseexplorer whomapped its coastsin the late 1490s
S. Children’s songusuallyaccompanied withmatching fingermotions (3 wds.)
T. Purportedproduction of anoffspring that isunlike either of itsparents
____ ____ ____ ____ ____ ____ ____ ____94 59 183 29 139 84 48 120
____ ____ ____5 206 105
____ ____ ____ ____ ____ ____ ____ ____191 74 161 33 135 113 123 181
____ ____ ____ ____ ____ ____ ____56 166 145 91 21 103 4
____ ____ ____ ____ ____ ____ ____ ____148 15 35 3 131 184 160 194
____ ____ ____ ____ ____ ____ ____ ____62 128 178 90 73 28 144 44
____ ____197 102
____ ____ ____ ____ ____ ____ ____ ____34 12 134 174 58 198 122 88
____ ____163 109
____ ____ ____ ____ ____ ____ ____ ____169 14 112 182 31 129 155 141
____ ____79 89
____ ____ ____ ____ ____ ____ ____ ____ ____17 116 100 130 63 164 86 46 76
____ ____ ____ ____ ____ ____ ____ ____18 108 95 159 179 64 125 149
____ ____ ____ ____ ____ ____ ____ ____119 177 205 136 153 96 6 26
____ ____ ____ ____47 162 77 185
____ ____ ____ ____ ____ ____ ____ ____78 137 41 170 124 55 68 30
____ ____ ____ ____ ____ ____ ____ ____93 127 70 9 195 110 173 24
____ ____ ____ ____53 36 157 143
____ ____ ____ ____ ____ ____ ____ ____81 107 20 132 190 147 203 92
____ ____69 49
____ ____ ____ ____ ____ ____ ____ ____ ____80 50 168 32 43 142 154 7 201
____ ____ ____ ____ ____ ____ ____ ____16 158 67 167 52 121 138 202
____ ____187 39
____ ____ ____ ____ ____ ____ ____ ____10 97 111 54 72 85 165 171
____ ____ ____ ____ ____22 126 150 204 192
____ ____ ____ ____ ____ ____ ____ ____13 186 60 98 106 23 87 45
____ ____172 151
____ ____ ____ ____ ____ ____ ____196 99 27 57 75 115 42
____ ____ ____ ____ ____ ____ ____ ____117 8 66 156 37 180 193 51
____ ____ ____ ____ ____ ____ ____ ____188 175 83 146 104 1 71 11
____ ____ ____ ____ ____ ____ ____65 152 200 118 40 25 133
____ ____ ____ ____ ____ ____ ____ ____199 140 82 101 38 19 2 176
____ ____ ____189 61 114
To solve, write the answers to the clues on thenumbered dashes. Then transfer each letter to thecorrespondingly numbered square in the grid to spella quotation reading from left to right. Black squaresseparate words in the quotation. Work back andforth between the word list and the grid to completethe puzzle. When you’re finished, the initial letters ofthe answers in the word list will spell the author’sname and the source of the quotation.
Acrostic | byMike Shenk
1 S 2 T 3 C 4 B 5 A 6 I 7 M 8 R 9 K 10 O 11 S 12 E 13 P 14 F 15 C 16 N 17 G 18 H 19 T 20 L
21 B 22 O 23 P 24 K 25 S 26 I 27 Q 28 D 29 A 30 J 31 F 32 M 33 B 34 E 35 C 36 K 37 R 38 T 39 N 40 S 41 J 42 Q
43 M 44 D 45 P 46 G 47 I 48 A 49 L 50 M 51 R 52 N 53 K 54 O 55 J 56 B 57 Q 58 E 59 A 60 P 61 T 62 D
63 G 64 H 65 S 66 R 67 N 68 J 69 L 70 K 71 S 72 O 73 D 74 B 75 Q 76 G 77 I 78 J 79 F 80 M
81 L 82 T 83 S 84 A 85 O 86 G 87 P 88 E 89 F 90 D 91 B 92 L 93 K 94 A 95 H 96 I 97 O 98 P 99 Q
100 G 101 T 102 D 103 B 104 S 105 A 106 P 107 L 108 H 109 E 110 K 111 O 112 F 113 B 114 T 115 Q 116 G 117 R 118 S 119 I
120 A 121 N 122 E 123 B 124 J 125 H 126 O 127 K 128 D 129 F 130 G 131 C 132 L 133 S 134 E 135 B 136 I 137 J 138 N 139 A
140 T 141 F 142 M 143 K 144 D 145 B 146 S 147 L 148 C 149 H 150 O 151 P 152 S 153 I 154 M 155 F 156 R 157 K 158 N
159 H 160 C 161 B 162 I 163 E 164 G 165 O 166 B 167 N 168 M 169 F 170 J 171 O 172 P 173 K 174 E 175 S 176 T 177 I 178 D
179 H 180 R 181 B 182 F 183 A 184 C 185 I 186 P 187 N 188 S 189 T 190 L 191 B 192 O 193 R 194 C 195 K 196 Q 197 D
198 E 199 T 200 S 201 M 202 N 203 L 204 O 205 I 206 A
From this week’sWall Street Journal
NEWS QUIZ DANIEL AKST
For previous weeks’puzzles, and to
discuss strategieswith other solvers, goto WSJ.com/puzzle.
1. AOLco-founderSteveCasesold hisVirginiaestate, oncethe childhood home of Jacque-line Kennedy Onassis, for $43million—to whom?
A. Time WarnerB. The kingdom of Saudi
ArabiaC. The federal governmentD. The College of William
and Mary
2. Indian government pricecontrols have created amassive glut—of what?
A. SugarB. LentilsC. RiceD. Microchips
3. There’s a lot riding on theTrial of the Pyx. But justwhat is it?
A. The comeback album ofthe PixiesB. The internet’s biggest on-
line role-playing gameC. A Royal Mint process of
weighing, used to assessvariations in coinsD. An age-old Anglican ritual
for defrocking a priest
4. Which big pork producer isthe target of a North Carolinalawsuit challenging its farmingpractices?
A. CargillB. HormelC. SmithfieldD. Manischewitz
5. When they can, corporateborrowers are tying their debtFR
OM
TOP:GLOBE
PHOTO
S/ZU
MAPR
ESS;
ISTO
CK
Across1 “Highway to Hell”band
5 Shares a sidewith
10 Jerk13 Greets withrespect
19 Sporty Camaro20 They broughtdown Nixon
21 “The Cask ofAmontillado”writer
22 Reagan stafferwho was “incontrol” briefly
23 Dashes to openthe onlyChristmas gift?
26 Creating lessmess
27 Aglow, maybe28 Old Dodges29 Like distantlands
31 Yield control of32 “This ___!”(fighting words)
34 Cyan sibling36 Sun, water andgood soil?
38 Erasmus’s isJune 2
41 Probe site,perhaps
43 Green subj.44 Wii predecessor45 Radioactivehydrogen isotope
91 JFK predecessor94 Twist in flight95 Like a librarybook, at times
96 Applygenerously
98 Mil. assistant101 Seized wheels103 Whopper topper104 Go-betweens105 Fine freestyles?108 With no
particularpurpose
110 Redden, perhaps111 It flows into theRhine nearKoblenz
112 Works, as dough114 First page of elcalendario
117 Concubine’schamber
118 Do someweaving
120 Submarinecrew’s mantra?
123 It makes for avery nice setting
124 Koblenzconjunction
125 Stock holder?126 List abbr.127 Coastal notches128 Stat in a
triple-double129 Wagner in
Cooperstown130 Some PC
connections
Down1 Certainevacuations
2 Squad cars3 Infomercialappeal
4 Loops in on anemail
5 Small matter6 Lofty place?7 A little too goodfor everybody
8 Hardlylong-winded
9 Calgary-to-Helena dir.
10 Top11 Curtailed oath12 Gets cozy13 Mrs. Robinsonportrayer
14 Encouragementfor el torero
15 Ice, in the mob16 Shiny fabric17 Woodstock wear18 Fiona, e.g.24 Add vitamins to25 Arm’s-lengthproduct?
30 Gp. scheduledto convene inTokyo in 2020
33 P.R. hours35 Penned37 Property seller,in law
39 Stinky Asianfruits
40 G.P. gp.42 Tenth pg. abbr.46 Bering or Cabot:Abbr.
47 Uniform color49 Like hair aftersome tonics
52 Royals managerNed
53 More abundant54 Far fromsophisticated
55 Pointed, at thetable
56 White coats57 Ace of Kiss61 Gene’s “HauntedHoneymoon”co-star
62 Seminalsupercomputer
63 Story that’s oftenscary
65 “We’d be happyto do that foryou”
67 Web addressender
68 Like a shot-putter’s throw
70 Home of a “talland tan andyoung andlovely” girl
72 Fox of fables73 Escort from theentrance
74 Pitch a tent, say81 Eagerly seized83 Golf’s Poulter85 Substitute driver87 Ones vigorouslyshaking cans
88 J.D.’s foreigncounterpart
89 Thelma’s pal90 Fork-shapedletter
91 GED seekers92 Fait accompli93 Tangles97 “___ live andbreathe!”
98 First man toachieve a CareerGolden Slam
99 Entice100 Oscar nominee
for “Foxcatcher”102 Go for gold104 Lady Bird’s
spouse106 Temerity107 One of the good
guys109 Slow, in scoring113 Redbox items115 Camel kin116 Eurasian grazers119 Turkey tender121 Pompeii coverer122 Proof ending
Identity Theft | by Samuel A. Donaldson
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
19 20 21 22
23 24 25 26
27 28 29 30 31
32 33 34 35 36 37
38 39 40 41 42 43 44
45 46 47 48 49
50 51 52 53 54 55 56
57 58 59 60
61 62 63 64 65 66 67 68 69 70
71 72 73 74
75 76 77 78
79 80 81 82 83 84 85
86 87 88 89 90 91 92 93
94 95 96 97
98 99 100 101 102 103 104
105 106 107 108 109 110
111 112 113 114 115 116 117
118 119 120 121 122
123 124 125 126
127 128 129 130
46 Butter portions48 Christmas tree,often
50 The Concorde,for short
51 What aseamstressmight do afterperfectly cuttinga dozenpatterns?
57 “Thought thiswould be ofinterest,” forshort
58 Guillermo’s gold59 Singer DiFranco60 Marsh ofmysteries
61 Drive, e.g.64 The Ice BucketChallengebenefited it: Abbr.
66 End piece?69 2016 Republicancandidate Carly
71 Wi-Fi icon?75 Mostloose-limbed
76 Head start, e.g.77 Coaching legendParseghian
78 Gets hitched79 Like someroutines
80 Manipulate82 Glass part84 Starter starter86 Reassurancefrom a voiceacting coach?
THE JOURNAL WEEKEND PUZZLES Edited by MIKE SHENK
Varsity MathThe solution to Sudoku Variant isshown below. In Making 8 and 16,8 = 4.7 + .8 and 16 = (.7 – .2)-4M A S K A G E N T E L B E C B S
A S L E E P R E N E E G E A R L O PC H A R L I E B R O W N O E N O L O G YR I P T O R N S C A M W A D E SO P S A R A L A C U R A L E G E N D
S T O L I R I L E Y S O UM I D D L E N A M E O L D B E F E L LA N E R A I N D U S C A P I T A LD A N U B E E T O N S O D E RA R I B N O V E L A T I N G E E P SM U S S E L B E D S F I N D U S E F U LA G E M A I N S R O M N E Y L I R A
D I C E A I L E S S M I L I NT U R T L E S M U S I C A D E N TA R I S E S G O D C A T H O D E R A YL A G S T A I D R H O N EC L O V E R H O N E Y D U D E T I C
R O G U E A N N E A L A B A M AG O I N G M A D C A L L E D A N U B E RI R S E B R O E M A I L P U L L A TN E T D A S H S O L E S L E N A
Combining RuleIn the set of numbers below, 72 and 99 are “combined” to produce 27. Then 27and 45 are “combined” to produce 18 and so on. The final 7 is not a misprint.What is x?
99 45 39 36 28 2172 27 18 21 x 13 7
O B R I E N A R A M I SL I A I S O N C A S K SI T U N E S C E L I N EA R T U R O H O I S T SP O R T E R S H E E T SA S I D E Y A R N D Y EV E R A W A N G W O L FO M E N S E M E S T E RO V I N E S U M M A R YD R O S S A T L A R G EO C T A D S E A B A S SD E C L A R E P R E S SD I A L O G T H E N E TA P P S T O R E T A T A
A River Runs Through It
SOLUTIONS TOLAST WEEK'S PUZZLES
Labyrinth
payments to slow-risingbenchmarks. Which of these isan example?
A. The one-month U.S. dollarLondon interbank offered rateB. The three-month LiborC. The euro unsecured over-
night interest rateD. The Sheboygan interbank
offered rate
6. ABC canceled RoseanneBarr’s hit sitcom after shesent a racist tweet—aimed atwhom?
A. Valerie JarrettB. Michelle ObamaC. Oprah WinfreyD. Condoleezza Rice
7. Global markets wererattled by developments inItaly. What happened?
A. European Central Bankchief Mario Draghi opted fora career in Formula Oneracing.B. Italian newspapers
revealed government deficits.C. German regional elections
were won by euro-bailout op-ponents.D. Investors feared a euro-
skeptic government would takehold in Rome.
8. In Japan, Coca-Colalaunched Lemon-Do, its firstalcoholic drink. Which actoris featured in ads for thedrink?
A. Yasuo FukudaB. Hiroshi AbeC. Shohei OhtaniD. Kazuki
Kitamura
Answers are listed belowthe crossword solutions at right.
PLAY
Provided by theNational
Museum ofMathematics
A Golden SetA golden set in tennisoccurs when one playerwins all 24 points of aset. In the French Open,women play the besttwo of three sets.What is the probabilityof a golden set some-where in a specifiedwomen’s match if eachpoint is determined byflipping a coin?
Learn more about the National Museum of Mathematics (MoMath) at momath.org LUCI GUTIÉRREZ
Answers to the News Quiz: 1.B, 2.A, 3.C, 4.C, 5.A, 6.A, 7.D, 8.B
VARSITY MATHWITH the French Openabout to begin, it’s timefor another tennis puzzle.
.
�
C14 | Saturday/Sunday, June 2 - 3, 2018 * * * * THEWALL STREET JOURNAL.
well-known photographers, I decided to do theopposite,” said Paul Martineau, the associatecurator in the Department of Photographs atthe J. Paul Getty Museum and the exhibition’sorganizer. “To highlight lots of photographerswho are deserving but just aren’t out there.”
Among these 89 photographers, unusually,are 15 women, including the boundary-push-ing Louise Dahl-Wolfe, whose 1946 shot“Model amid Ruins, Paris” captures a womanin gloves, fur-trimmed suit and high heelspicking her way gingerly through the rubbleof a bombed-out building.
The opening gallery covers the tumultuousperiod from 1911 to 1929. The “fathers of mod-ern fashion photography,” Mr. Martineau said,are the triumvirate of Steichen, Baron deMeyer and Vogue publisher Condé Nast. Earlyin the 20th century, as magazines evolved tophotographs from illustrations, photographershoned signature styles. De Meyer, a maestroof backlighting, crafted lush, silvery tableausof socialites, including his 1913 “Mrs. Gertrude
WHEN HARPER’S BAZAAR asked the photographer Hiroto shoot a sandal in 1963, he almost turned themdown, expecting that the magazine wanted a staticportrait of a shoe made of satin and mock pearls.
Now 87 years old, Hiro recently recalled the assign-ment, which in the end he took on. He discussed the project withHarper’s editors. Then, in the New York studio that he shared with hismentor, Richard Avedon, Hiro took a bulky Deardorff camera and clam-bered up to a trap door in the building’s stairwell, so he could shootfrom overhead. Hiro recalled that though he didn’t precisely envisionthe final photo, he “knew the essence of what...it could and should be.”
The result was an energetic masterpiece, “Black Evening Dress inFlight, New York,” in which a model, seen from above, strides forwardwith her sandaled right foot. The image made the final cut of morethan 160 photographs in “Icons of Style: A Century of Fashion Photog-raphy, 1911–2011,” opening June 26 at the Getty Center in Los Angeles.
Such flashes of instinct and inspiration infuse the history of fashionphotography, from Edward Steichen’s painstaking 1911 portraits of Pariscouture, through years shadowed by war and financial depression, tothe smartphone snapshots flowing through Instagram and Snapchat.
“Rather than building a show that…would focus in on the most popular,
BY BRENDA CRONIN
MASTERPIECE | ‘FAMILY OF SALTIMBANQUES’ (1905), BY PABLO PICASSO
HiddenFigures
THE OFTEN ROMANTIC THEME of itinerantentertainers and street performers enjoys along history in France, going back to the royalcourt of Louis XIV. Among this king’s amuse-ments was the commedia dell’arte, a troupe ofItalian actors—dressed as characters Harle-quin, Pierrot and Columbine—as well as jug-glers and acrobats, these latter called saltim-banques from their jumping motions.
When the king’s mistress Mme. de Main-tenon dismissed them from court in 1697,these actors and saltimbanques performed inpublic, traveling to newer locations. Their de-scendants appear in works from HonoréDaumier to Edouard Manet to Georges Seurat.Perhaps the most famous is Pablo Picasso’s“Family of Saltimbanques” (1905).
The grandest picture of his pre-Cubist pe-riod—it measures over 7 by 71/2 feet—thiswork has been in the National Gallery of Art’scollection since 1963, a bequest of patronChester Dale. It moved to the Gallery’s EastBuilding when it opened 40 years ago thisweekend. There, in 1979, we began a joint art-history and technical study of the picture.
“Who are these rambling acrobats?” thepoet Rainer Maria Rilke asked in his “Fifth Du-ino Elegy” (1923) after seeing it in the summerof 1915. Far from being a random, anonymousgroup as they are in other treatments of thesubject, the figures here have specific identi-ties. Harlequin bears Picasso’s features; that ofthe small acrobat those of his friend, the poet
BY E.A. CARMEAN JR.AND ANN HOENIGSWALD
REVIEW
ICONS
A Century of Fashion andPhotographic Genius
An ambitious Getty exhibition includes Steichen, Avedon and Penn, and celebrates the little known
Max Jacob. The deep-browed acrobat and theample jester resemble, respectively, colleaguesAndré Salmon and Guillaume Apollinaire.
But the painting did not originally appearas it does now. Freely brushed and near-trans-
parent paint areas inthe foreground andthe woman’s hat sug-gested to us that Pi-casso had madechanges to an earliercomposition. So in
1980 we made X-radiographs of the entire pic-ture, a process that, combined with subse-quent art-historical research, disclosed thepainting’s complex metamorphosis.
A crucial clue about Picasso’s original in-tentions came from Fernande Olivier, who re-calls in her published journal that Picasso
painted “a largecanvas, a groupof acrobats on aplain. Some areresting, the oth-ers working.... If Iremember cor-rectly, this canvaswas repaintedseveral times.”
Although shedidn’t mentionwhat happenedto that “large”picture, Olivier’sdescription fitthe “Circus Fam-ily” (1904-05), asmall drawing inthe BaltimoreMuseum of Art.Looking at the X-radiographs, wefound the lostpainting embed-ded under the
surface of “Family of Saltimbanques.”The spectral presence of the “Circus Fam-
ily” was one of many stunning discoveriesthat we made. In penetrating all the layersof “Saltimbanques,” these technical imagescaptured a second picture, this one the mir-ror image of a mid-sized gouache, “Two Ac-robats With a Dog” (1905), now owned bythe Museum of Modern Art. Pervaded with ablue tonality, this work is closer to the cur-rent “Family of Saltimbanques,” presentingtwo costumed performers standing in a bar-ren landscape.
The X-radiographs also disclosed thatchanges had been made to the third composi-tion, or the topmost layer of the painting.
Three separate galaxies of saltimbanquesnow formed, serving to navigate us throughPicasso’s months-long campaign on the Na-
� Technology hasrevealed the earlierversions of the workand its evolution.
©TIM
WALKER
,COURTESYOFSTEV
ENANDCA
THER
INEFINK
tional Gallery’s painting. The first group isfrom the initial “Circus Family” layer, a sec-ond set is related to the composition of twoyoung acrobats, and a third is connected tothe present state of the painting.
One of us (Ms. Hoenigswald), after techni-cally examining Picasso’s work for decades,has found a pattern of his compositionsevolving directly from his earlier imagery.We see that in the “Family of Saltim-banques,” where one layer morphs into a sec-ond and a third. Moreover, he intentionallyleaves clues, so-called pentimenti, revealing,for example, a shift in the woman’s hat, orthe thin leg under the boy’s puffy pants, andcracks revealing unrelated colors or obscuredtextures, all to draw the viewer’s attention tothe picture’s process.
Picasso’s life played a role in the “Family ofSaltimbanques.” Already noticed as part ofthe avant garde in Barcelona, he moved toParis in 1900 seeking recognition in this cen-ter of Modernism. A year of obscurity led nextto his traveling between the cities until 1904,when he returned to Paris, meeting Olivier,Salmon and Apollinaire (he knew Jacob ear-lier). In December of that year, these friendsbecame regular visitors to the Cirque Me-drano, a local small circus show where Picassosketched many acrobats backstage.
Picasso transformed this experience intohis large canvas’s initial layer of a “CircusFamily.” But the genius of the “Family of Sal-timbanques” came when he portrayed his art-ist friends in the final picture, and trans-formed their status as outsiders by identifyinghis characters with the historic, wanderingtroupe of once royal entertainers. The isola-tion of Picasso’s figures, presented in this vir-tual frieze of symbolic and poetic images, liftsthe work to greatness.
Mr. Carmean is a former curator and Ms.Hoenigswald is a former paintings conserva-tor, both at the National Gallery of Art. ES
TATE
OFPA
BLOPICA
SSO/ARTISTS
RIGHTS
SOCIETY(ARS
),NEW
YORK
/NAT
IONALGALLERYOFART
Vanderbilt Whitney, in a Costume by LéonBakst.” By contrast, Steichen “simplifies ev-erything,” Mr. Martineau said, in coolly ele-gant images such as “Actress Caja Eric Model-ing a Gown by Chanel, New York,” made in1928 at Condé Nast’s Park Avenue apartment.
Supplementing the exhibit’s photographsare period clothes from the Los AngelesCounty Museum of Art, including an ethereallow-waisted Chanel dress from 1924. Theclothes demonstrate that after a period of
more-daring fashion,the 1929 stock-marketcrash and the subse-quent Great Depres-sion whipsawed styles.“Whenever there’ssome kind of turmoil
economically, there’s kind of a backlash,” Mr.Martineau said. Fashion’s about-face is evidentin George Hurrell’s 1932 “Joan Crawford Wear-ing the Letty Lynton Dress,” in which the ac-tress poses with hands clasped in a head-to-toe explosion of white ruffles. Adrian, adesigner for Metro-Goldwyn-Mayer, createdthe demure costume. “This dress was copiedby Macy’s and sold over 50,000 copies, at theheight of the Depression,” Mr. Martineau said.
The curator has also included German-bornErwin Blumenfeld, who shot to prominence asa photographer in the 1930s. The onetimeleather-goods shop-owner broke through alocked door in the space he was renting “andfound a full darkroom,” Mr. Martineau said. Aborn experimenter, Blumenfeld tried scratch-ing, freezing and even burning his negativesas well as shooting through textured glass orgauze. In less than a decade, he was photo-graphing one of the first supermodels—docu-mented in the exhibit by 1938’s “FashionStudy, Lisa Fonssagrives, Paris.”
Despite their different styles, Mr. Marti-neau said, Irving Penn (1917-2009) and Avedon(1923-2004) “set the tone for everything thathappened after the 1950s.” Penn’s hallmarkswere stillness and poise, using studio lights tocapture models as paragons of elegance. Bycontrast, the peripatetic Avedon plunged hismodels into unusual settings, where he pep-pered them with images to embody. “Hewould tell them stories,” Mr. Martineau said,“like, ‘Pretend you’re a crow on an icy branchin the middle of winter.’”
One of those striking settings is “Dovimawith Elephants, Evening Dress by Dior, Cirqued’Hiver, Paris, August 1955.” In it, the Queens-born Dorothy Juba, who took the mellifluousname Dovima, appears at the circus in Paris.Avedon sought to juxtapose “the elegance ofthe model and the unusually gritty location,”Mr. Martineau said. Dovima, the highest-paidfashion model of her time, is wearing “thefirst dress that Yves Saint Laurent made” forthe House of Dior, Mr. Martineau said. In thepicture, Dovima rests a hand on one ele-phant’s trunk and reaches out toward an-other’s ear. She exudes a rapturous serenity,Mr. Martineau said, despite being “leery ofbeing knocked over or stepped on.”
The exhibition’s final sections include JamelShabazz’s glimpses of early hip-hop styles inBrooklyn in the early 1980s as well as edgyworks by Helmut Newton and others, where atone of sex and violence often leaves theclothes in the background. By the 1990s, tech-nology took over. Digital retouching spread af-ter Photoshop’s introduction. A decade later,fashion bloggers were ascendant, abandoningartful focus and giving sidewalk dandies aflicker of fame. The show wraps up with imagesof snappy dressers from Milan and New York.
’The Dress-Lamp Tree’is a 2002 photo shotby London-based TimWalker, born in 1970.
“Amongthese 89photogra-phers,unusually,are 15women.
.
�
Related Documents
