Vertical Pulse

Ghandi Was Far From Perfect

I recently learned that 1.5 million people were killed during the hostilities that erupted when Pakistan broke away from India. A further 7 to 8 million people abandoned their homes in what became the largest exodus in history. This violence and dislocation quickly followed the British retreat from India which Ghandi clamored for. The fact that this bit of history is not well know in the West is another example of how the media refuses to point out any blemishes of the people that it decides to canonize.

Other examples of Ghandi's shortcomings are discussed in The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results. 

The Hitler Salute

I recently read the Hitler Salute: On The Meaning of a Gesture by Tilman Allert. This book explained the compulsory nature, pervasiveness and significance of the Hitler salute.

As Professor Allert writes, "With the Hitler salute, the regime intruded into the tiniest elements of everyday life. Postmen used the greeting when they knocked on people's doors to deliver packages or letters. Customers entering department stores were greeted with "Heil Hitler, how may I help you?" In no area of their lives were Germans exempted from the duty to perform this 'bit of practical National Socialism'. Everywhere throughout Germany, small metal signs reminding people to use the Hitler salute were posted in public squares, on telephone poles and street lanterns. The greeting became a component of academic rituals from the university down to kindergarten, a compulsory framework for the pedagogical relationship. Kindergarten and primary school teachers had their pupils say the new greeting over and over until they got right. Pupils were required to say 'Heil Hitler!' at the beginning and end of every school period, and the first thing each new class of first graders encountered when they opened their primers was a lesson on how to greet others, replete with people lining the streets, their arms raised in the Hitler salute."

The Hitler Salute presents a great case on the disproportionate impact of small gestures. Other examples of seemingly small occurrences impacting world events are presented in The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results.

The Secret of Einstein's Fame

Albert Einstein achieved rock star fame during his lifetime. Even today, Einstein is by far the most well-known physicist. The Baby Einstein Company was acquired for $150 million by Disney. Hebrew University in Jerusalem earns tremendous royalties just by licensing his name.

There is no question that Albert Einstein was a genius. He was also active in politics. He was offered the presidency of Israel but declined the nomination. He spoke so ardently against the Nazi's that they placed a $5,000 bounty on his head. He campaigned against the development of the atomic bomb. He proved his loyalty to his adopted country by performing mathematical calculations on behalf of the US Navy to determine the optimum placing of mines in the Pacific Ocean. His wit also won the hearts of the media.

However, there were and are today many brilliant physicists. If one were to peer into many of their lives, one would find that many of them devoted considerable time and energy advancing philanthropic and honorable causes. Some of them were and are telegenic, attractive and accomplished wordsmiths.

So why was and is Einstein so revered? Is it more due to Einstein's intelligence or his hair? This is a deadly serious question. Was the incremental advantage that thrust Einstein into super stardom his superior intellect over the other Nobel-laureate physicists or his electrified-looking halo of hair?

It might very well be because of his hair. There may only be 1,000 people on the face of the earth who are intelligent enough to debate whether Einstein's contributions to physics exceeded those of the likes of Max Plank, Sir Isaac Newton or James Clerk Maxwell or any of the other scores of Nobel Laureates for Physics.

As many as 9,000 people attended Einstein's lectures which often dragged on for three or four hours. Most of us would be lost after listening to a few sentences. Even if we had understood an entire three hour lecture, Einstein himself said repeatedly it would take him three days to explain the Theory of Relativity. Moreover, Einstein delivered many of his presentations to English speaking audiences in his native German and quite often there was no translation. The fact that the vast majority of the people who attended Einstein's lectures had absolutely no idea what he was talking about, in no way diminished his appeal.

Einstein's hair, crumpled suits and German accent made him look and sound like a genius. The image that he projected propelled him into eternal fame.

These are some of the kinds of episodes that are discussed in our new book, The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results.

The Power of Incremental Advantage documents how one bullet, one vote, one second, one word, and one inch have shaped history and changed the world.

The Power of Incremental Advantage is replete with strategies, tactics and practical leadership lessons to help you stay one step ahead of your closest competitors. These leadership lessons are supported by well-researched historical examples.

Another One Bites The Sub-prime Dust; Global FDI In Trouble

Another hedge fund bites the sub-prime dust. According to Reuters, Braddock Financial Corp. announced yesterday that it will be liquidating its $300 million Galena Street Fund after concerns of its sub-prime mortgage exposure triggered investor redemptions. This is the third hedge fund to fall apart in the last few days because of the sub-prime mess. By now we have all heard of the other names that collapsed under the weight of the mortgage-backed securities meltdown: Dillion Read Capital Management, Bear Stearns, Queen’s Walk Investment, and now Galena Street Fund.

Probably the most obvious way to detect if a hedge fund is in trouble is when management halts investor redemptions. It was reported that one of the Bear Stearns’ funds stopped honoring redemptions in May, about a month before its troubles made headlines. Earlier this week United Capital Asset Management LLC, in Key Biscayne, Fla., stopped letting investors withdraw money from four hedge funds. The Wall Street Journal reported that Galena lost about $100 million from its sub-prime holdings.

The WSJ also reported that prices have been depressed by investors "flooding the market" with asset-backed securities. "In addition to technical weakening in the market, many [asset-backed] securities continue to perform poorly. As a result, Wall Street has taken what we believe to be a very conservative approach to pricing and leveraging of securities, further dampening liquidity."

On an unrelated topic, but also a stroke of bad news for hedge funds, private equity, and for the economy in general, the WSJ reported that many countries are starting to erect, or are considering, barriers to curb foreign direct investment (FDI). Can anyone say Smoot-Hawley Act of 1930. One of the main engines of global economic growth is investors pouring money into promising investment prospects around the world. If governments start blocking inflows of money the repercussions will be felt far and wide.

The Smoot-Hawley law triggered other nations to put up tariffs and trade restrictions causing the Great Depression to go global and creating monsters like Adolf Hitler, Mao Zedong, Benito Mussolini, and others of that time. Not suggesting that today’s movement to curb FDI will cause the next depression, but such political posturing is short-sighted and dangerous.

Even more disturbing, the U.S. Congress is what instigated this latest round of protectionism by blocking the Dubai Ports deal last year. Now it is about to extend the Committee on Foreign Investment in the United States review period from 30 days to 45 days. I think they should be finding ways to streamline the cumbersome process to reduce the review time from 30 days to 15.

The U.S., supposedly the advocate of free markets and free trade, is sending the world the wrong message. After all, we have the most to lose if globalization slows down considering we are the second largest recipient of FDI (nearly $100 billion in 2005) in the world. But it seems, politicians want to end the party.

These are some of the issues that are discussed at IncreMental Advantage’s conferences. For more information please visit www.incrementaladvantage.com.

The End of Barbary Terror

I recently read The End of Barbary Terror: America's 1815 War Against the Pirates of North Africa by Frederick C. Leiner. This was a very thorough historical account of North Africa's practice of pirating ships and enslaving Europeans and Americans. Mr. Leiner conducted detailed research and explained how America was extremely successful in waging war against these practices. Among the points of interest in the book are the following:

• Historian Robert C. Davis estimates that in the 250 years of peak slave-taking by the Barbary corsairs, from 1530 to 1780, at least one million, and perhaps as many as one and one-quarter million, white Christians were enslaved in Islamic North Africa.
• In the sixteenth and seventeenth centuries, Algiers alone was said to have held 30,000 captives - in the 1620s, more British subjects lived as slaves in Islamic North Africa than as freemen in the colonies of North America. In 1631, corsairs descended on the village of Baltimore, in Ireland, and seized the entire population, carrying them back to slavery in Algiers.
• In 1796, without any navy, the United States paid the astronomical sum of $642,000 - about one-fifteenth of all federal outlays that year - to ransom 107 American seamen from Algiers.
• There is evidence that the British had a tacit understanding with Algiers whereby the British would protect Algiers from any attack in return for the Algerians refraining from seizing British citizens. The fact that the British reputedly refitted the entire Algerian navy in 1812 seemed to corroborate a tacit Anglo-Algerian naval alliance against the United States.
• The Madison administration appointed Mordecai Noah, probably the most prominent Jew at the time, to ransom American slaves in Algiers in 1813. The primary reason is that the leading Jewish brokers in Algiers, the Baccri family, had been instrumental in ransoming the American captives of Algiers in 1796.
• Stephen Decatur led the mission that put an end to North Africa's pirating of American ships and the enslavement of their crews and passengers. Decatur had been away from America for a mere 187 days. In that time, he had sailed across the Atlantic, captured the flagship of the Algerian navy in a battle that killed its famous commander, directed the squadron's capture of another Algerian crusier, negotiated a peace treaty in 48 hours with Algiers that met all of the criteria laid down by the secretary of state, including the freeing of the Edwin's (an American ship that was captured by the Algerians) captives and the perpetual abandonment of tribute, demanded and received compensation for losses from Tunis and Tripoli, freed a handful of Danish and Neopolitan captives and set eight of them ashore in their native countries, and sailed back across the Atlantic. What is even more impressive is that this wildly successful mission occurred when the United States was reeling from the War of 1812, the nation's finances where in a shambles, Washington DC was still full of burned buildings (from the British attack on the city during the War of 1812) and the country had little navy to speak of.

Hitler's Prisons: A Book Review

I recently read Hitler's Prisons: Legal Terror in Nazi Germany by Nikolaus Wachsmann. This was a highly academic treatise on the intersection of the appearance of legitimate law and incarceration in Nazi Germany. The book discussed the political dissidents' incarceration in "regular" prisons, not concentration or death camps.

Among the interesting points in this book were the following:

• Crime appeared to be pervasive in the Weimar Republic, which was unencumbered by the stricter censorship of previous decades. In Berlin, at the time the world's third largest city, the press was informed of every murder that took place. The police believed that they would be successful in solving crimes by involving the public. During intermissions cinemas even showed photos of wanted criminals.
• Political violence was not hidden from the public, as were most other crimes, but often took place in broad daylight. Many Germans witnessed the street battles for themselves, which strengthened their conviction that crime and disorder were on the rampage.
• All forms of non-conformist behavior could be interpreted as attacks on the state, including complaints about living conditions or jokes about Hitler's sex life. Most of the defendants before German courts, who were overwhelmingly male, had not set out to take a political stance against the regime. In fact, the defendant's tongue had often been loosened by alcohol: almost one-third of all defendants tried by the Frankfurt special court for "malicious attacks" had been denounced for remarks they had made in a pub.
• In 1933, individual German states outlawed the Jehovah's Witnesses as "enemies of the state", with a national ban following in 1935. Having sworn the oath of loyalty to Jehovah, the believers refused to acknowledge the claim to total control of society by Hitler and the Nazi dictatorship. The believers did not practice the Hitler salute, boycotted political demonstrations, organizations and elections and the men also refused to serve in the German army after general conscription was introduced in 1935.
• Cases of castration in Nazi Germany were openly discussed in newspapers and in legal and medical journals, which sometimes even carried "before and after" photographs of castrated men. However, at the time, castration was not viewed as inhumane punishment. Denmark introduced voluntary castration in 1929, with Norway in 1934, Holland in 1938 and Sweden in 1944. Finland and some states in the USA allowed compulsory castration for sex offenders. 
• The Nazi leadership despised homosexuals because they "had upset the sexual balance-sheet of Germany" by failing to produce children. In all, some 10,000-15,000 homosexuals were taken to concentration camps. By contrast, around 100,000 served time in penal institutions.
• It is estimated that 360,000 individuals became victims of the Sterilization Law in Nazi Germany, the great majority of them before the outbreak of the war.
• In Nazi Germany, inmates were often held by the police for prolonged periods of time before their trials began. Similarly, prisoners were often handed over to the police by the court system after their sentences expired. It was common for judges - whom the Reich Ministry of Justice described as soldiers on the home front - to alert the police before a prisoner's sentence was to expire so as deprive prisoners of freedom. When the military authorities believed that their prisoners might benefit from resistance fighters trying to free them, the military handed such prisoners over to the legal system for safekeeping.
• Hitler himself had ordered in October 1940 that concentration camp inmates and convicts be used to neutralize Allied bombs which had not been detonated.
• After World War II, East Germany did a much more thorough job of purging former Nazis from legal positions. The strategy for the more aggressive purging of former Nazis in East Germany was to position itself to characterize West Germany as a bastion of Nazi holdouts and a fascist state that embraced Nazi ideals. Of around 1,000 East German judges in 1950, only one had been a member of the Nazi Party. To fill the gaping holes left by the mass dismissal of Nazi officials, the authorities in the east trained so-called people's judges in crash courses.

Saddam's Secrets: A Book Review

I recently read Saddam's Secrets: How An Iraqi General Defied And Survived Saddam Hussein by Iraqi General Georges Sada. Saddam's Secrets is a biographical book about General Sada. Reading this biography provided a glimpse into life in Iraq under Saddam Hussein as well as a sketch of Saddam's megalomania.

Among the most interesting points in the book are:

• During Operation Desert Storm in 1991, 147 bridges were demolished by coalition bombers and missile strikes. In 2003, by contrast, not a single bridge was destroyed.
• Saddam was intent on attacking Israel with chemical weapons in 1991. However, such plans were not carried out because it became apparent that Israel possessed such sophisticated technology that such an attack would have been futile. For instance, Israeli aircraft had very advanced radar with the capability to see more than 125 miles in any direction whereas the Iraqi planes could only see for about 15 miles. Also, Israeli laser-guided missiles could lock on Iraqi fighters while they were still 65 miles away and fire at them at a range of at least fifty miles.
• Of the 606 Kuwaitis captured by Iraq during the Gulf War, 605 were killed by Saddam.
• Saddam placed military bunkers under civilian shelters so as to preempt any attacks on military command and control centers.
• During the five months preceding the commencement of hostilities in the Gulf War, the United Nations Security Council put forth 12 separate resolutions condemning Saddam's actions and calling for immediate withdrawal from Kuwait. His refusal to cooperate with those demands led to the formation of one of the most formidable coalitions in military history, representing 31 nations from five continents. Ten of these nations had predominantly Arab or Muslim populations.
• Of the approximately 360,000 Iraqi soldiers on the battlefield during the Gulf War, 28% of them (nearly 100,000) were killed in action, and as many as 200,000 sustained serious injuries. In addition, coalition forces captured 60,000 prisoners, and by some estimates there may have been as many as 150,000 deserters. As for casualties on the other side, 390 American soldiers, sailors, and airmen died in combat, while 458 were wounded in action. Among coalition forces, there was a total of 510 casualties.
• Saddam was making a fortune by evading oil sanctions. (According to a report of the Independent Inquiry Committee of the United Nations, headed by Paul Volker, more than 2,200 companies participating in the UN's Oil-for-Food program paid at least $1.8 billion in kickbacks to Saddam.) One method was by swapping oil with Iran. Thus, when inspectors checked the properties of oil being shipped in the Gulf, they would determine that the oil came from Iran. Iran was able to ship out Iraqi oil with ease because no one checked their oil shipments since they were not subject to sanctions.
• In 2003, when the terrorists came and bombed 18 churches in Iraq, many Assyrians left the country. Within three months, between 35,000 and 50,000 Christians left Iraq.
• Saddam had Chinese technicians working on nuclear bombs in China on behalf of Iraq. Saddam took advantage of an irrigation dam collapse in Syria in June 2002 to spirit WMD out of Iraq. There were 56 sorties of commercial airliners that whisked away WMD to Syria under the guise of humanitarian relief.
• A law in Iraq stipulated that at least one close relative must remain in Iraq when another relative was traveling or living outside of Iraq.
• There was a law in Iraq that held that everyone must watch Saddam's speeches on television. Some Iraqis were murdered by Saddam simply for turning off the television when he was making a speech.
• Before the coalition invasion in 2003, Saddam distributed more than eight million AK-47s to the popular army, and another four million were stolen from the military arsenals. Saddam released 150,000 criminals from Iraqi jails in 2003 to destabilize Iraq.
• In addition to the killing of many Iranians during the Iran-Iraq War and many Kuwaitis during the Kuwaiti Invasion, Saddam killed more Baath Party members than any other person. Saddam killed more officers of the Iraqi Army than any other person or nation. Saddam killed more Tikritis than any other man. Saddam killed more clerics of all the major Muslim denominations and tribes than any other man.

Two other books about Saddam Hussein that I found very informative are: a) I Was Saddam's Son by Latif Yahia and Karl Wendl which discusses Saddam and Uday Hussein's sadistic behavior; and b) Saddam: King of Terror by Con Coughlin which discusses Saddam's rise to power.

Bodies and Souls

I recently read Bodies and Souls: The Tragic Plight of Three Jewish Women Forced into Prostitution in the Americas by Isabel Vincent. This book provided an interesting historical account of poor Eastern European Jewish women who were lured from their homes to destinations such as Brazil and Argentina. Despite their arduous ordeals, these Jewish prostitutes maintained their dignity by organizing Jewish congregations, cemeteries and mutual aid societies.

Among the points of interest in Bodies and Souls were:

• Between 1881 and the beginning of the First World War, one-third of Eastern European Jews left their homes in the biggest single exodus since the Inquisition. Jews, like many immigrants, considered American one huge undifferentiated land mass that offered unbelievably high standards of living such as an orange a day. Jews were attractive immigrants in countries such as Argentina because they were a source of cheap labor and were likely to work as strike-breakers and subvert fledgling unions. Most of the immigrants that went to Argentina and Brazil were single men. Thus, importing prostitutes was a highly lucrative business.
• From the end of the 1860s until the beginning of the Second World War in 1939, thousands of young, impoverished women, were literally sold into slavery by a notorious criminal gang made up entirely of Jewish mobsters.
• Many of these women were duped into religious marriages. Local men returning from America were extremely appealing to destitute young women who barely had enough to eat and who were often the victims of religious persecution. They were quickly married in stille chuppah, or silent weddings. Their new "husbands" slept with them to lower their inhibitions. Then, their "husbands" had their wives board ships and told the women that they would meet them in far away locations such as South America. Once the women arrived in South America, other pimps would force them into prostitution.
• In many instance, when shtetl girls were raped by pimps, their parents forced them to marry their assailants.
• Jewish prostitutes existed throughout history, but they were never seen as a necessary evil, or even tolerated, as they were among people of other faiths. They are hated figures in the Old Testament. In May 1905, with Poland in a state of political upheaval, Jewish workers looted and destroyed brothels throughout the city, beating and killing prostitutes and pimps. Forty brothels were torched, eight people were killed, and more than one hundred were injured in the uprising.
• The established Jewish communities in the cities in which the Jewish prostitutes were forced to operate made absolutely no effort to help their co-religionists. On the contrary, members of the established Jewish communities avoided and disparaged the Jewish prostitutes. Rabbis from the established congregations usually refused to officiate at prostitutes' funerals. The international Jewish community decided to remain mute about the issue of Jewish prostitutes because they did not want the world to believe that Jewish women accounted for a disporportionate amount of prostitution.
• It was because they were spurned by the established Jewish communities that the Jewish prostitutes organized and established congregations, synagogues and cemeteries. In several Latin American cities, the prostitutes were better organized and established cemeteries before the established Jewish communities did so. In some South American cities, Jewish prostitutes put aside a portion of their earnings each month for as long as five years to purchase a plot of land for their cemetery.

Jewish Soldiers in the Wehrmacht

I had the pleasure of listening to a very informative lecture by Bryan Mark Riggs, author of Hitler's Jewish Soldiers. Professor Riggs conducted tremendous original research into men of Jewish lineage who served in Hitler's Army. This research is truly ground-breaking as the issue of Jews in the Wehrmacht was neglected by the entire academic community before Professor Riggs delved into this subject. Moreover, Professor Riggs is a highly skilled orator. Among the points that I learned from Professor Riggs' lecture are the following:

• There were about 1,800 Jewish officers in Hitler's army. There were about 90,000 soldiers of one-half Jewish blood and about 60,000 soldiers of one-quarter Jewish blood. Of extreme importance to note, almost none of these soldiers - Professor Riggs' research only revealed about 18 to 20 men of Jewish blood - took part in the Holocaust.
• Hitler believed that if a mischling (a person of a combination of Aryan and Jewish blood) looked Aryan (e.g. had blond hair and blue eyes), such person would be deemed to have dominant German blood and recessive Jewish characteristics.
• Also, some German women who had Jewish husbands saved their children by claiming that they had affairs with German men and that their children were the product of such relationships.
• Persons of 100% Jewish blood were barred from serving in the Wehrmacht. However, persons of one-quarter or one-half Jewish blood were required to serve in the army. These mischling could not be officers without Hitler's direct permission.
• In April 1940, men of one-half Jewish blood were discharged from the Wehrmacht, except those needed in various campaigns. Some 70,000 Jews were dismissed. This purging of (one-half) Jews occurred before Germany went to war with the Soviet Union, where 85% of German fatalities occurred.
• Hitler did allow clemency for men of one-half Jewish blood to remain in the Wehrmacht. Some were allowed to remain, some where given permission to remain and be promoted, and some were deemed to be of pure German blood. Those who remained in the army did so to save their families and, in fact, such service did, at least, delay deportations.

The Pacific Theater in World War II

I recently watched two DVD's about the Pacific Theater during World War II. These DVD's were The Price for Peace which is a Stephen Spielberg and Stephen Ambrose production and Enola Gay from The History Channel. Among the insights from these DVDs are:

• Over 8,000 ethnic Japanese committed suicide on the island of Okinawa as a result of Japanese propaganda about the atrocities that American forces would commit if they gained control of the island. This was a complete loss of life because the victorious American forces moved the civilians out of harm's way and provided food, water and medical treatment to Okinawa's civilians.
• The Japanese adopted suicide tactics because they were vastly overextended and outmanned as they fought Americans, Britons, Chinese, Dutch and the Soviet Union. (The Japanese were even threatening to invade India.) Japanese soldiers blew themselves up under enemy tanks and their kamikaze pilots were never taught how to land.
• The Japanese were completely prepared to defend mainland Japan to the last man. They began digging foxholes all over Japan and brought back their best soldiers from all over their empire. In one raid on Tokyo using conventional bombs, 100,000 people were killed. This did not dampen Japanese willingness to fight. Even after the U.S. dropped an atomic bomb on Hiroshima, the Japanese continued to fight. Their newspapers said that the loss of 140,000 citizens was not a major military setback as few soldiers were killed or military facilities were destroyed. The Soviet Union declared war on Japan before the atomic attack on Nagasaki, but the Japanese still refused to surrender.
• Development of the atomic bomb in the U.S. began in 1939 after Albert Einstein wrote a letter to President Franklin Roosevelt about the importance of atomic research. Before the Manhattan Project, the U.S. only spent $2,000 on atomic research.
• Robert Oppenheimer, a lead scientist for the Manhattan Project, had many Communist sympathies and ties. However, he was not the Soviet spy in Los Almos, Klaus Fuchs was.
• When the atomic bomb was tested in New Mexico, the explosion was seen as far away as Amarillo, Texas, 420 miles away.
• The total cost to develop the atomic bomb was $2 billion.
• The atomic explosion in Hiroshima was equivalent to 13,500 tons of high explosives. The center of impact momentarily registered heat of 100 million degrees. The temperature on the ground at Hiroshima reached 5400 degrees Fahrenheit. Some 70,000 people died instantly. Nine out of 10 doctors and nurses in Hiroshima were killed or injured. The water mains were shattered in 70,000 places and two-thirds of the buildings were totally destroyed.
• The atomic attack on Nagasaki had a number of setbacks. Weather forced the mission up a few days. Unlike in the attack on Hiroshima, the bombs were fully armed at take-off. The plane flew into a bad storm and came under attack from Japanese planes. The pilots had to drop the atomic bomb to make it home because their fuel was at very low levels. The plane nearly missed running into the mushroom cloud that arose from the explosion. The bomb on Nagasaki detonated three miles away from its target. As a result, the bomb detonated in a hilly terrain and in an area which had more industrial facilities than residences. This was why 70,000 people were killed in Nagasaki versus some 140,000 fatalities when Hiroshima was bombed.