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The Best Business Writing 2012

The Best Business Writing 2012

Dean Starkman
Martha M. Hamilton
Ryan Chittum
Felix Salmon
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  • Book Info
    The Best Business Writing 2012
    Book Description:

    The Best Business Writing 2012 reflects the year's most intriguing reporting and rigorous investigative journalism at a time of dramatic economic crisis and upheaval. Covering bad business behavior, the intersection of politics and money, and big-picture analysis, the volume fills a longstanding gap for those seeking diverse, enriching, and lively perspectives on the business world.

    This year's selections include Rolling Stone's profile of Don Blankenship and his brutal tenure as CEO of Massey Energy; the Guardian's groundbreaking and courageous investigation into the News of the World phone-hacking scandal and its indictment of the Rupert Murdoch media empire; and the Milwaukee Journal Sentinel's poignant account of the fatal consequences of federal deregulation in health and medicine. Two searing pieces on the ongoing mortgage scandal, one a hard look at the role of Merrill Lynch in inflating the housing bubble for its own gain and so bringing about its own destruction, and the other a detailed breakdown of Countrywide's malfeasance, provide critical context for the financial crisis; while articles on recoveries in Norway, Germany, and elsewhere examine the global recession. Additional articles tackle bank fees and bailouts, the Buffett Rule, the influence of the corporate lobby, the legacy of Alan Greenspan, and the future of the American auto industry, and provide intimate looks behind the scenes of such companies as Pfizer, Google, and IKEA.

    Contributors include Warren Buffett, Paul Krugman, Gretchen Morgenson, Steve Pearlstein, James B. Stewart, Matt Taibbi, and Martin Wolf.

    eISBN: 978-0-231-50433-1
    Subjects: Language & Literature, Business, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-x)
  3. Introduction
    (pp. xi-xviii)
    Dean Starkman

    In the wake of the financial crisis of 2008, Damian Tambini, a professor at the London School of Economics, wrote a paper that asked a pretty basic question: “What Is Financial Journalism For?”

    As it happens, Tambini found that no one could really agree what business and financial journalism is for, or even who it’s for: Is it for investors? Markets? Or is it for everybody, the public?

    We believe we know the answer: Yes.

    Welcome to Best Business Writing 2012, the first in an annual series that will collect the best English-language writing on business, finance, and economics. For the...

  4. Acknowledgments
    (pp. xix-xxii)
  5. Part I. Bad Business

    • 1. The Dark Lord of Coal Country
      (pp. 3-25)
      Jeff Goodell

      One balmy night this fall, a black BMW 750LI—a German luxury sedan that costs more than a typical coal miner makes in a year—pulls into the parking lot of the shaggy country club in Bluefield, West Virginia. Bluefield is a fading coal town in a state that is full of fading coal towns. Seventy-five years ago, when the Pocahontas coal seam was one of the richest veins in America, and tooling up for the twentieth century required massive tonnage of coal, there was money here, and hope. But now the coal is mined out, the buildings downtown are...

    • 2. Missing Milly Dowler’s Voicemail Was Hacked by News of the World
      (pp. 27-31)
      Nick Davies and Amelia Hill

      The News of the World illegally targeted the missing schoolgirl Milly Dowler and her family in March 2002, interfering with police inquiries into her disappearance, an investigation by the Guardian has established.

      Scotland Yard is investigating the episode, which is likely to put new pressure on the then editor of the paper, Rebekah Brooks, now Rupert Murdoch’s chief executive in the UK; and the then deputy editor, Andy Coulson, who resigned in January as the prime minister’s media adviser.

      The Dowlers’ family lawyer, Mark Lewis, this afternoon issued a statement describing the News of the World’s activities as “heinous” and...

    • 3. Phone-Hacking Crisis Shows News Corp Is No Ordinary News Company
      (pp. 33-37)
      Jay Rosen

      Watching the phone hacking crisis crack wide open over the last few weeks has left me puzzled about its ultimate causes: what is it about News Corp. that has produced these events?

      I don’t think we understand very much about this. We can say things like, “Ultimate responsibility goes to the man at the top,” meaning Rupert Murdoch, chairman and CEO. And that sounds right, but it still doesn’t explain how any of it happened. “The key people are criminals, liars, or willfully blind …” We could say that, but then we would have to explain how so many of...

    • 4. The Bugger, Bugged
      (pp. 39-49)
      Hugh Grant

      When I broke down in my midlife crisis car in remotest Kent just before Christmas, a battered white van pulled up on the far carriageway. To help, I thought. But when the driver got out he started taking pictures with a long-lens camera. He came closer to get better shots and I swore at him. Then he offered me a lift the last few miles to my destination. I suspected his motives and swore at him some more. (I’m not entirely sympathetic towards paparazzi.) Then I realized I couldn’t get a taxi and was late. So I had to accept...

    • 5. A Case of Shattered Trust
      (pp. 51-72)
      Raquel Rutledge and Rick Barrett

      Houston—In the photograph, they walk together through the hospital hallway, two-year-old Harrison Kothari smiling as he reaches up to hold his parents’ hands, his blue gown nearly touching the floor. Mom and Dad gaze down at the “little angel” they tried for two years to conceive.

      “I would give anything to go back to that day,” says Shanoop Kothari, the boy’s father. “Anything.”

      Days later, Harry would be sleeping.

      The hospital is quiet. Shanoop, an investment banker, sits by Harry’s bed doing paperwork. His wife of thirteen years, Sandy, has gone home to get some sleep. She will be...

  6. Part II. The Financial System and Its Discontents

    • 6. The “Subsidy”: How a Handful of Merrill Lynch Bankers Helped Blow Up Their Own Firm
      (pp. 75-81)
      Jake Bernstein and Jesse Eisinger

      Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank’s own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating.

      Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank’s money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with...

    • 7. Countrywide Protected Fraudsters by Silencing Whistleblowers, Say Former Employees
      (pp. 83-97)
      Michael Hudson

      In the summer of 2007, a team of corporate investigators sifted through mounds of paper pulled from shred bins at Countrywide Financial Corp. mortgage shops in and around Boston.

      By intercepting the documents before they were sliced by the shredder, the investigators were able to uncover what they believed was evidence that branch employees had used scissors, tape and Wite-Out to create fake bank statements, inflated property appraisals, and other phony paperwork. Inside the heaps of paper, for example, they found mock-ups that indicated to investigators that workers had, as a matter of routine, literally cut and pasted the address...

    • 8. Curse the Geniuses Who Gave Us Bank of America
      (pp. 99-103)
      Jonathan Weil

      Ask anyone what the most immediate threats to the global financial system are, and the obvious answers would be the European sovereign-debt crisis and the off chance that the United States won’t raise its debt ceiling in time to avoid a default. Here’s one to add to the list: the frightening plunge in Bank of America Corp.’s stock price.

      At $9.85 a share, down 26 percent this year, Bank of America finished yesterday with a market capitalization of $99.8 billion. That’s an astonishingly low 49 percent of the company’s $205.6 billion book value, or common shareholder equity, as of June 30....

    • 9. Is the SEC Covering Up Wall Street Crimes?
      (pp. 105-119)
      Matt Taibbi

      Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file—“Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where...

    • 10. In Financial Crisis, No Prosecutions of Top Figures
      (pp. 121-134)
      Gretchen Morgenson and Louise Story

      It is a question asked repeatedly across America: why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?

      Answering such a question—the equivalent of determining why a dog did not bark—is anything but simple. But a private meeting in mid-October 2008 between Timothy F. Geithner, then president of the Federal Reserve Bank of New York, and Andrew M. Cuomo, New York’s attorney general at the time, illustrates the complexities of pursuing legal cases in a time of panic.

      At the Fed, which oversees the...

  7. Part III. Over There

    • 11. Time for Germany to Make Its Fateful Choice
      (pp. 137-141)
      Martin Wolf

      “Perhaps future historians will consider Maastricht a decisive step towards the emergence of a stable, European-wide power. Yet there is another, darker possibility.… The effort to bind states together may lead, instead, to a huge increase in frictions among them. If so, the event would meet the classical definition of tragedy: hubris (arrogance), ate (folly); nemesis (destruction).”

      I wrote the above in the Financial Times almost twenty years ago. My fears are coming true. This crisis has done more than demonstrate that the initial design of the eurozone was defective, as most intelligent analysts then knew; it has also revealed—...

    • 12. In Norway, Start-Ups Say Ja to Socialism
      (pp. 143-160)
      Max Chafkin

      Wiggo Dalmo is a classic entrepreneurial type: the Working-Class Kid Made Good.

      Dalmo, who is thirty-nine, with sandy blond hair and an easy smile, grew up in modest circumstances in a blue-collar town dominated by the steel industry. After graduating from high school, he apprenticed as an industrial mechanic and got a job repairing mining equipment.

      He liked the challenge of the work but not the drudgery of working for someone else. “I never felt like there was a place for me as an employee,” Dalmo explains as we drive past spent chemical drums and enormous mounds of scrap metal...

  8. Part IV. Politics and Money

    • 13. Swiped: Banks, Merchants, and Why Washington Doesn’t Work for You
      (pp. 163-177)
      Zach Carter and Ryan Grim

      Charlie Chung runs Cups & Co., a coffee and sandwich shop in the basement of the Russell Senate Office Building. Known on Capitol Hill simply as “Cups,” the shop—a rickety twenty-second train ride away from the elevator to the Senate floor—is always swarmed with lobbyists, staff ers, and the occasional senator.

      If customers flash an American Express card to buy a banana, Chung waves them off: “Just take the banana. Don’t give me the card.”

      Chung has run Cups for about a decade and says that plastic has allowed him to better serve a hurried and harried clientele. But...

    • 14. Stop Coddling the Super-Rich
      (pp. 179-181)
      Warren Buffett

      Our leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

      While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we megarich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for...

    • 15. Blame for Financial Mess Starts with the Corporate Lobby
      (pp. 183-189)
      Steven Pearlstein

      Another great week for Corporate America!

      The economy is flatlining. Global financial markets are in turmoil. Your stock price is down about 15 percent in three weeks. Your customers have lost all confidence in the economy. Your employees, at least the American ones, are cynical and demoralized. Your government is paralyzed.

      Want to know who is to blame, Mr. Big Shot Chief Executive? Just look in the mirror because the culprit is staring you in the face.

      J’accuse, dude. J’accuse.

      You helped create the monsters that are rampaging through the political and economic countryside, wreaking havoc and sucking the lifeblood out...

    • 16. Nine Things the Rich Don’t Want You to Know About Taxes
      (pp. 191-207)
      David Cay Johnston

      For three decades we have conducted a massive economic experiment, testing a theory known as supplyside economics. The theory goes like this: Lower tax rates will encourage more investment, which in turn will mean more jobs and greater prosperity—so much so that tax revenues will go up, despite lower rates. The late Milton Friedman, the libertarian economist who wanted to shut down public parks because he considered them socialism, promoted this strategy. Ronald Reagan embraced Friedman’s ideas and made them into policy when he was elected president in 1980.

      For the past decade, we have doubled down on this...

    • 17. The Hijacked Crisis
      (pp. 209-211)
      Paul Krugman

      Has market turmoil left you feeling afraid? Well, it should. Clearly, the economic crisis that began in 2008 is by no means over.

      But there’s another emotion you should feel: anger. For what we’re seeing now is what happens when influential people exploit a crisis rather than try to solve it.

      For more than a year and a half—ever since President Obama chose to make deficits, not jobs, the central focus of the 2010 State of the Union address—we’ve had a public conversation that has been dominated by budget concerns, while almost ignoring unemployment. The supposedly urgent need...

    • 18. Greenspan, Rubin, and a Roomful of Hypocrites
      (pp. 213-218)
      Morgan Housel

      “There is a lot of amnesia that’s emerging, apparently,” former Federal Reserve chairman Alan Greenspan told the Financial Crisis Inquiry Commission on Wednesday. He’s appalled that we don’t remember the Alan Greenspan who fought for more regulation and led a crusade to stomp out predatory lending.

      And we don’t. Because he didn’t. Greenspan’s testimony, along with cameos by former treasury secretary Robert Rubin and Citigroup executive Tom Maheras, are classic examples of soaking up adulation and nine-figure paydays during the run-up of a bubble only to plead ignorance after it pops.

      Throughout Greenspan’s two-hour testimony, committee members persistently asked why...

  9. Part V. The Big Picture

    • 19. The Rise of the New Global Elite
      (pp. 221-243)
      Chrystia Freeland

      If you happened to be watching NBC on the first Sunday morning in August last summer, you would have seen something curious. There, on the set of Meet the Press, the host, David Gregory, was interviewing a guest who made a forceful case that the U.S. economy had become “very distorted.” In the wake of the recession, this guest explained, high-income individuals, large banks, and major corporations had experienced a “significant recovery”; the rest of the economy, by contrast—including small businesses and “a very significant amount of the labor force”—was stuck and still struggling. What we were seeing,...

    • 20. Can the World Still Feed Itself?
      (pp. 245-251)
      Brian M. Carney

      As befits the chairman of the world’s largest food-production company, Peter Brabeck-Letmathe is counting calories. But it’s not his diet that the chairman and former CEO of Nestlé is worried about. It’s all the food that the United States and Europe are converting into fuel while the world’s poor get hungrier.

      “Politicians,” Mr. Brabeck-Letmathe says, “do not understand that between the food market and the energy market, there is a close link.” That link is the calorie.

      The energy stored in a bushel of corn can fuel a car or feed a person. And increasingly, thanks to ethanol mandates and...

    • 21. Law School Economics: Ka-Ching!
      (pp. 253-263)
      David Segal

      With apologies to show business, there’s no business like the business of law school.

      The basic rules of a market economy—even golden oldies, like a link between supply and demand—just don’t apply.

      Legal diplomas have such allure that law schools have been able to jack up tuition four times faster than the soaring cost of college. And many law schools have added students to their incoming classes—a step that, for them, means almost pure profits—even during the worst recession in the legal profession’s history.

      It is one of the academy’s open secrets: law schools toss off so...

    • 22. When Patents Attack!
      (pp. 265-301)
      Alex Blumberg and Laura Sydell

      Ira Glass: Back during the rise of the dot-coms and the Internet, Jeff Kelling and a few friends were working as programmers together at this company in Dallas, and they decided they want to get together the way that tech geeks were doing all over the world at the time and come up with an idea for their own Internet company to start.

      Jeff Kelling: One of my business partners, Andy, his wife had just had a baby, and we started thinking about photo-sharing. You know, Andy could share his photos of his new baby with, you know, the grandparents...

    • 23. The Illusions of Psychiatry
      (pp. 303-317)
      Marcia Angell

      In my article in the last issue, I focused mainly on the recent books by psychologist Irving Kirsch and journalist Robert Whitaker, and what they tell us about the epidemic of mental illness and the drugs used to treat it.¹ Here I discuss the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM)—often referred to as the bible of psychiatry, and now heading for its fifth edition—and its extraordinary influence within American society. I also examine Unhinged, the recent book by Daniel Carlat, a psychiatrist, who provides a disillusioned insider’s view of the psychiatric profession. And...

    • 24. From Inside Job
      (pp. 319-326)
      Charles Ferguson, Adam Bolt and Chad Beck

      Charles Ferguson: Do you think the financial-services industry has too much, uh, political power in the United States?

      Glenn Hubbard: I don’t think so, no. You certainly, you certainly wouldn’t get that impression by the drubbing that they regularly get, uh, in Washington.

      Narrator: Many prominent academics quietly make fortunes while helping the financial industry shape public debate and government policy. The Analysis Group, Charles River Associates, Compass Lexecon, and the Law and Economics Consulting Group manage a multi-billion-dollar industry that provides academic experts for hire.

      Two bankers who used these services were Ralph Ciofi and Matthew Tannin, Bear Stearns...

  10. Part VI. Corporate Stories

    • 25. Inside Pfizer’s Palace Coup
      (pp. 329-355)
      Peter Elkind, Jennifer Reingold and Doris Burke

      For Jeff Kindler, it was a humiliating moment. The CEO of Pfizer, the world’s largest pharmaceutical company, had been summoned to the airport in Fort Myers, Fla., on Saturday, December 4, 2010, for a highly unusual purpose: to plead for his job.

      Three stone-faced directors, representing the company’s board, sat inside a drab airport conference room as the CEO, trained as a trial lawyer, struggled to argue his most important case. Alerted to this meeting less than twenty-four hours earlier, Kindler detailed his accomplishments, speaking nonstop for the better part of an hour. He touted his bold reorganizations, praised his...

    • 26. It Knows
      (pp. 357-367)
      Daniel Soar

      This spring, the billionaire Eric Schmidt announced that there were only four really significant technology companies: Apple, Amazon, Facebook, and Google, the company he had until recently been running. People believed him. What distinguished his new “gang of four” from the generation it had superseded—companies like Intel, Microsoft, Dell, and Cisco, which mostly exist to sell gizmos and gadgets and innumerable hours of expensive support services to corporate clients—was that the newcomers sold their products and services to ordinary people. Since there are more ordinary people in the world than there are businesses, and since there’s nothing that...

    • 27. Innovators Don’t Ignore Customers
      (pp. 369-373)
      John Gapper

      According to the business textbooks, Reed Hastings is a visionary and innovator. But thousands of his customers, and many of his investors, think the chief executive of Netflix is an idiot.

      The DVD rental and online film service is “going to be held up as a gold standard of how to avoid being disrupted.” Clayton Christensen, the Harvard Business School professor and author of The Innovator’s Dilemma, tweeted this week. As he opined, Netflix shares were dropping rapidly and 25,000 of its customers were posting irate protests at having their service disrupted.

      I’m with them. Mr. Hastings is the latest...

    • 28. House Perfect
      (pp. 375-401)
      Lauren Collins

      On a recent Sunday, I woke up around 8 a.m. I had slept on a sultana hagavik mattress. I smoothed the dvala fitted sheet and tucked the henny cirkel quilt beneath four pillows sheathed in matching polkadot cases. In the kitchen, some lettuce clung to the meniscus of a blanda blank salad bowl. Rouged rättvik wineglasses and dirty dragon forks waited to be washed. In the living room, I sat down on the kivik sofa. Because it is a few years old, its lines are leaner than those of current models, which have been expanded to accommodate the modern habit...

    • 29. Voting to Hire a Chief Without Meeting Him
      (pp. 403-407)
      James B. Stewart

      The mystery isn’t why Hewlett-Packard is likely to part ways with its chief executive, Léo Apotheker, after just a year in the job. It’s why he was hired in the first place.

      The answer, say many involved in the process, lies squarely with the troubled Hewlett board. “It has got to be the worst board in the history of business,” Tom Perkins, a former HP director and a Silicon Valley legend, told me.

      Interviews with several current and former directors and people close to them involved in the search that resulted in the hiring of Mr. Apotheker reveal a board...

    • 30. How Ford Became Last Man Standing
      (pp. 409-421)
      Bernie Woodall and Kevin Krolicki

      Bill Ford Jr. just can’t let the good times roll. In late December, Ford, fifty-three, was on a family ski vacation in Colorado but found himself unable to put aside dark visions of how too much success could lead to the next crisis for the auto industry.

      As Ford Motor Co. prepared to close the books on its biggest comeback year for sales and earnings since the 1980s, Ford was talking to friends about the risk of gridlock choking booming urban centers from Sao Paolo to Shanghai—and potentially choking auto sales, too.

      “I want us to start thinking now...

    • 31. What Made Steve Jobs So Great?
      (pp. 423-428)
      Cliff Kuang

      In the wake of Steve Jobs’s resignation, let’s consider the greatest decision he ever made. It didn’t happen in a garage in Cupertino, sweating with Steve Wozniak as they dreamed up a computer for the common man. Or in a conference room, as managers told him that no one would ever pay $500 for a portable music player. Or in another conference room, as new managers told him no one would ever pay $400 for a cell phone. Rather, it was in a dusty basement of the Apple campus.

      Jobs had just recently come back to the company, after a...

  11. Permissions
    (pp. 429-432)
  12. List of Contributors
    (pp. 433-440)