Tuesday, November 25, 2014

BPL’s Bklyn BookMatch- A Match For The Human Race’s Book Future?: Electronic Books and Robot Librarians?

Brooklyn Public Library president Linda E. Johnson envisions staff reductions if her idea of a “new” state-of-the-art Brooklyn Library is ever built, not surprising since the “new” library she wants to “replace” the exiting one would be a mere fraction of the current library’s size.  Such staff reductions would follow on the heels of staff reductions at the BPL and a switching away from professional library staff that has been going on for a long time now. Librarians who once ran libraries have been replaced with “site managers” which sounds more like a real estate term. The BPL has also shifted away, in general, from hiring professional trained librarians, replacing them with lower-level clerks.

Ms. Johnson said that she did not know exactly how many fewer librarians would work at a smaller Brooklyn Heights Library in Downtown Brooklyn, that “the numbers have yet to be determined," but that her hope is that when built the "new building will be a model of efficiency" with a reduced staff that would not have to compensate for the drawbacks of dealing with a library that was of an "improperly" large size.

But does Ms. Johnson (problematically not a librarian herself) even know what a librarian should be, what functions they perform by being on site?  At the BPL’s September 16, 2014 trustees meeting, Ms. Johnson and her staff proudly unveiled a way to replace on-site reference librarians with an electronic service substitute, a sort of virtual reference librarian system that can respond to a patron's inquiry, and by virtue of calculating "appeal factors" (BPL’s terminology to describe the service) will tell e-mailers what books they want to read with a week's turnaround time.

Here is a quote from the presentation given the trustees:
You don't usually get this chance to have such a conversation with someone at the reference library desk.
Of course, as you are not face to face with a live person this won't be exactly such a chance either, but it goes along with how we shrink libraries for real estate deals.  The  BPL says it's recommended that the responding e-librarians try to make these responses "as personable as possible."

How will this work?  You might stroll into your local library to begin this computerized interaction to help find and discover what books you want to read.  Linda Johnson’s vision of any library into which you might stroll is a place from which physical books will soon almost entirely disappear. Books take up space and, when they disappear, libraries can be made much smaller, facilitating selling off their real estate, like with the Brooklyn Heights Library, the Donnell Library or the NYPL’s Central Library Plan (derailed at the moment).

If you stroll into a bookless library for your computerized interaction you won’t have the other ways of selecting books available to you.  You won’t be able to browse the shelves or discover that a book you really want but didn’t know about is adjacent to the book you thought you wanted to find (“it’s never the book you want, it’s the book beside the book.”). You won’t find the book you didn’t yet know you wanted because it luckily attracted your attention by being  unusually and promisingly fat sitting on the shelf, because it was unusually thin, because it was lovingly worn out, and unusually old.  You won't find it because it was in sparkling just-arrived condition, or because it caught your eye on the reshelving cart or as a librarian reshelved it because somebody else hot on the trail of the same kinds of things you might be looking for might just have used it.  You won’t start up a conversation because you have bumped into someone else with your interests wandering in the same section.  There will be none of this kind of `serendipity’ (if that’s what one should call it). And it's unlikely you’ll take home a book home from that bookless library that same day.

You might not choose to go into the library at all for your computerized interaction, the benefit of ever visiting that physical library perhaps being minimal, unless you are one of the 27% of New Yorkers that the NYPL estimates are currently on the other side of the digital divide and are without broadband internet access.  If you don't have your own internet access you may still be impelled to visit a physical library.

But where does this vaporous e-relationship go from here (even as we might have to struggle to describe what “here” is):
    •    Maybe, the beginning is that the e-responding “reference librarian” is in some (central?) Brooklyn location from which all such inquiries from Brooklynites get answered.
    •    The three New York City library systems, the BPL covering Brooklyn, the Queens Library covering Queens, and the NYPL covering Manhattan the Bronx and Staten Island too, have been in talks to coordinate and consolidate operations.  Would this electronic service not seem a service high on the list for such consolidation of operations?  Where will the e-responses be generated from then?
    •    At the BPL trustees meeting it was noted that the BPL was only one such library in the country launching such a system now, that other library systems are doing similar things.  Maybe then, very soon, all these systems can consolidate.  Then the e-responses to Brooklynites can come from someplace in the Mid-West where the cost of living is cheaper and salaries lower.
     •    But we have seen such out-sourcing in the past and what has ultimately happened often is that the work has been outsourced to foreign countries like India where, while many people still speak and read English, the salaries are still even markedly lower.
     •    But, would our libraries still want to continue to run these contracted-out services themselves at all?  The New York City’s library system administrators are clearly bowing to the influence of money and money-influenced politics and elected officials when they plan to sell public libraries to benefit private real estate developers.  Isn't it likely that library system administrators of such a mind set would be convinced to simply contract out these services to the private sector?  Doesn’t Amazon have an an algorithmic advice infrastructure already set up to assist people in deciding what they want to read?  Wouldn’t Amazon be the perfect candidate to take over the whole system?  If that happened, the Washington Post, now owned by Amazon owner Jeff Bezos, who acquired that newspaper at a premium, could then write in the paper's style section a clever and cheeky little article about how state-of-the art and efficient this new Amazon service was.  Truly, mightn't Amazon know best that “Customers Who Read This Item Also Read. . . .”
     •      New York library administrators continue to push to overcome public resistance as they seek to shift patrons away from physical books and over to the electronic books.  Amazon can supply those books and that way Amazon can keep track of each page you read on your Kindle and how long you spend reading it and. . . . that way Amazon can make very good recommendations.
   •    Will it be actual professional reference librarians who provide these services in the future?   . . . Or will there be shortcuts?  Maybe even the obvious ultimate shortcut: Perhaps, after the system has made do for a time with workers in India (that did or, like Ms. Johnson, didn’t spend time in school to claim library degrees), the system will progress to what could be the inevitable next step. . .  the e-responders need not be human beings at all!  With a few of those Amazon-copyrighted algorithms mashed up with some Artificial Intelligence programs there could be a set-up that works beautifully with the “bots” that these days roam our virtual universe without our being able to tell the difference.
Is there anything wrong with all this?  Can’t we simply hail it as the marvel of efficiency that it probably and most certainly is?

The book collections of New York’s libraries used to be curated by librarians assigned to the different area libraries who got to know their communities and would attend book-fair events to assess, based on their familiarity with their patrons, what books should be added to that particular library’s collection.  More recently, decisions about what books will be made available in local libraries around the city are being made more `efficiently’ from a central administrative location. It's done based on call slip data that can be aggregated and then the frequency with which a book is borrowed stands in for its value.

When City Council member Ben Kallos met with Citizens Defending Libraries (as a co-founder of Citizens Defending Libraries I was part of that meeting) he identified a pitfall with this approach: At one point he had been involved in efforts to substantially augment the supply of Japanese language books in the Roosevelt Island Library.  The library administration officials soon wanted to get rid of the books again. . .  Because there were no call slips showing that the community was borrowing the books.  The books were, in fact, being used, Kallos explained, but due to cultural difference they were being used by patrons visiting the library and reshelving the books after reading them, not thinking in terms of taking them out of the library.  The library was regarded as the place to do one’s reading of library books.

In what is now known as the slow food movement we speak increasingly and ever more universally of the importance of food being grown locally and as having a “terroir,” a term once more often used narrowly to describe how the taste of wine reflected the special characteristics infused by where the grapes used to make a wine were grown.  Is it possible that when it comes to the brain food of books and libraries that this concept applies as well? Could it apply to an even greater degree?   Or is the importance of `locality' reserved for other things?  As far as I know, location, location, location is still the motto of the real estate industry 

Let me drum up some gloom.

A couple of weeks ago I went to the first day of a two-day conference held at Cooper Union on the dystopian aspects and perfidious promises of technology (Techno-Utopianism and the Fate of the Earth).  The conference organizers managed to put together an impressive 24 hours worth of speakers (Bill McKibben and Ralph Nader were featured Saturday night) on subjects that were individually highly fascinating, but in the aggregate bleakly depressing, especially given the warnings being dispensed about everything from Monsanto’s Genetically Modified Organism strategies, to synthetic biology, to the Genetic Redesign of Human Beings. . 

.  Some of the themes and insights discussed were how techo-fixes are destined to disappoint and lead ever onward to the need for more techo-fixes (Michael Huesemann), and how illusory technicalprogress” has substituted as a distraction for what once was the goal of social progress (John M. Greer).

Many of the speakers came back to certain common refrains like how technology can lead to massive and rapid societal dislocations (corporate land grabs in Africa and third world countries- Anuradha Mittal- or replacing dairy farmers with factories that produce synthetic milk from vats of genetically altered yogurt- Jim Thomas) and how those in control and already at the pinnacles of power regularly forerun the game, steering the promise of technology (or often just masquerades of its promise- GMO’s that don’t really produce more food or are not close to being off the drawing board, “yellow rice” that does not actually supply vitamins better than alternatives) to seize and redistribute even more power and wealth to themselves.*  These two things, dislocations and increased imbalances of wealth and power, are often related.
(*  It is interesting to note that, according to one speaker at the conference, Clive Hamilton, the same companies that spend to heavily sponsor climate science denial are also investing in and promoting “geoengineering” schemes to artificially cool down a warmed-up planet like pumping sulfur into the upper atmosphere. . . Talk about the your techno-fixes coming with awful downsides and unforeseeable ramifications!-  You mean it's not just satire?)
The comparative superiority and reliability of the natural and organically evolved existing order of things was also frequently mentioned, together with observations of how technicians tend to ignore such superiorities with anthropocentric hubris.  Efforts to de-extinct the Passenger Pigeon, likely to be futile, are phenomenally expensive and resource-absorbing compared to preserving existing threatened species (David Ehrenfeld) . . .  Aquanautic swarming robots designed to chop up jellyfish that clog and shut down nuclear power plants around the world (Eileen Crist) are a side-show compared to the global warming and overfishing that cause these exploding populations that some fear may soon take over the oceans entirely.

As we ascend into the techosphere of an ethereal ethernet existence does the concept of place, physical existence and physical interactions fall by the wayside, no longer important?  That’s a hard question.

Last month I attended WNYC/WQXR’s Community Advisory Board meeting and Graham Parker, General Manager and Vice President of WQXR, spoke about his goal for WQXR, the New York classical music radio station, to succeed as a worldwide radio station:.  He referred to “grand ambitions” to be “the Number One brand in classical music” with many listeners already in Ireland, Japan, Korea and China.  He cited a recent 19% growth in international listeners, and a 34% growth in national users.  This is an example of “placelessness,” of, as Mr. Parker put it, succeeding “way beyond our terrestrial borders.” At the same time Mr. Parker expressed optimism about fulfilling that ambition because, based in New York (an example of “placeness”), WQXR was well-situated to do so:   "New York is the best place to launch yourself from, into a national or international market.  We’ve got the best of everything in this city, and we’ve got the access to it."
    
For better or worse, another aspect of this is that WQXR views itself as competing with every other classical music station in the world.  That competition may make for better quality and increase the variety of high-quality offerings that listeners who are able to roam an entire globe of offerings can choose from, but, conversely, it also can ultimately diminish who, on the other side of this equation, gets to participate in accessing the global audiences.  A classical listener listening to another classical music station is not listening to WQXR and, vice versa, a listener to WQXR elsewhere on some far away spot of the globe is not listening to their local station.

It is akin to the situation with what have been termed "Massive Open Online Courses" or "MOOCs"  These can be viewed as a tool for democratizing higher education, making the instruction of excellent university professors available to multitudes world-wide at little or virtually no seeming cost to the immediate beneficiaries.  But in “Who Owns the Future?” author Jaron Lanier raises concerns.  There are “qualms about mono-culture” tied in with the fact that you are playing a high-stakes winner-take-all star system game.  He also wonders whether:
. . .on-line efforts of this sort could create siren servers, even nonprofit ones, which could end up undermining the finances and security of academics. . .

. . .  Students at colleges ranked lower than Stanford would tune in to Stanford seminars, and gradually wonder why they’re paying their local, lower-ranked academics at all.  If locals are to remain valuable once a globalized star system comes into being over the ‘net, it can only be because they are present and interactive.

But online experts can also be made virtually present and interactive. . .  Artificial intelligence can animate a simulated tutor. . .
Why should we keep on paying for colleges?  Why pay [to support] a privileged class of middle-class people? . .
* * * * 
This is a pattern we’ll see over and over again. . . You get an incredible bargain up front. . , but in the long term you also face reduced job prospects.  In this case. .  fewer academic jobs. .
. . .Get educated for free. . But don’t plan on a job as an educator.
He also observes: "digital networks have thus far been mostly applied to reduce [the] benefits of locality," the ability to be a "local star" knowing, and locally serving with particularity a local neighborhood.


Notwithstanding, I have a certain love of technology so I don't want to be overly negative.

And It would be unfair of me to present theories about where the future of electronically accessed off-site reference librarians might take us without first finding out the experience that this service presents now.  Accordingly, I decided to try it out.

The Bklyn BookMatch site presents a form with the questions (bolded below) to which I responded as set forth below:
Are you looking for any specific reading recommendations? If so, please explain below. Otherwise, please share the titles, authors and/or types of books you enjoy, and why: *

I have found extremely enlightening books about how we collectively create value in society, culturally, economically, technologically, and politically, largely through what we share and the ways we interact, how the multiplicity and variety of those interactions accelerate and contribute to advancement, essentially why "civilization" and "city" as words share the same route.

I seek out books for insight about the world that will, hopefully, improve my instincts (escaping or countering pulls in wrong directions) and equip me with tools for my own participation in that dynamic, hopefully responsibly and justly. Reiterating somewhat, I am attracted to ideas about the importance of the public realm, the public commons, the need to respect and protect it, and the rules humankind makes up, democracy included, in efforts to shape our shared society even as the world organically self-organizes itself.

Though civilization may represent what humankind complexly unites to create, I have found terrifically consonant edification in books reminding us that the natural realm is foundationally shared too, communally by all the planet's species, with convincing analysis that economics and ecology, functioning with similar overlapping principles, ultimately meld to erase dividing lines when it comes to establishing the interactive balances essential to thrive or survive.

Topics of particular interest: Communications industry, concepts of property and forms of ownership, money in politics and reforms to address it, organic development, and checks and balances on power, hubris and imbalanced dominions.

        Titles and authors I enjoy:

"The Master Switch: The Rise and Fall of Information Empires," by Tim Wu. I enjoy its brilliant illustration of how, without corrective intervention, the communications industries bend toward monopoly or monopsony with probably detrimental cultural, political and societal consequence.

"Common as Air: Revolution, Art, and Ownership," by Lewis Hyde. It convincingly makes the case for the societal advancement and organic benefits that derive from knowledge that's shared as part of a broad and extensive commons.

All of Jane Jacobs' books, including the most obscure, "The Question of Separatism: Quebec and the Struggle over Sovereignty." Jacobs is more famous for a single book, "The Death and Life of Great American Cities," but I especially like most of her more developed work: "The Economy of Cities," "Cities and the Wealth of Nations," "Systems of Survival" and "The Nature of Economies." I enjoy Jacobs' rigor and preference to learn from the closely observed rather than through the received prisms of the theories of experts.

As more elucidation about Jacobs, I enjoyed the book by Jacobs' protege, Roberta Brandes Gratz: "The Battle for Gotham: New York in the Shadow of Robert Moses and Jane Jacobs."

"The Power Broker: Robert Moses and the Fall of New York," by Robert A. Caro. Caro's perpetual preoccupation with the intricate working of power was first addressed to this era of urban change.

"Gotham: A History of New York City to 1898 (The History of New York City)," by Mike Wallace. I live in New York, so knowing about its history informs what I observe around me.

"The Federalist Papers," by assorted Founding Fathers, John Jay, James Madison, Alexander Hamilton. How important the understanding and thinking about the need for checks and balances on human faults and frailty and what mechanisms will work.

"Republic, Lost: How Money Corrupts Congress--and a Plan to Stop It," by Lawrence Lessig. A study of how money in politics delivers bad decisions and outcomes and how the problem of that money can be counteracted.

"Who Owns the Future?" By Jaron Lanier. This book fascinatingly grapples with the anomaly of how wealth in the technological era is created, in a broad-based way, via the contributions of all of us, and yet technology concentrates wealth in a few, economically squeezing the middle class to an ever greater degree economically and in humanistic terms.

Examples: Accelerating technological improvements mean "that more and more things can be done practically for free . . . When machines get incredible cheep to run, people seem correspondingly expensive." and "If observation of you yields data that makes it easier for a robot to seem [like you and replace you] then you ought to be owed money for [that]. This is such a simple starting point that I find it credible, and I hope to persuade you about that as well."

"The Origins of Political Order: From Prehuman Times to the French Revolution," by Francis Fukuyama. Looking at how we evolve better, stable governance.

"The Wealth of Nations," by Adam Smith. A seminal work on how capitalism works all on its own and, also, how it doesn't.

"The Uses of Disorder: Personal Identity and City," by Richard Sennett. Sennett builds on Jane Jacobs' theme that humankind's attraction to ordering the world can be unhealthy and stifle growth.

I also like books that provide insight into real people exercising important influences today, often finding them of increased interest when they are older and overlooked, perhaps written for a different intended purpose. In that category I would put-

"Bloomberg by Bloomberg," by Michael R. Bloomberg with help from Matthew Winkler. The book, released as Bloomberg prepared to launch into politics, contains an intriguing admission that when giving money to "charities" Bloomberg always considered what he was getting back in exchange.

"More Than They Bargained For- The Rise and Fall of Korvettes," by Isadore Barmash. A postmortem of how the once-successful Korvettes' chain devolved into the failure of a sell off of its substantial well-located real estate assets. Important because one of the characters in the saga is Marshal Rose, current NYC real estate magnate and simultaneously a trustee of the NYPL that is now looking to sell-off and shrink libraries as real estate deals.

Are there any authors and/or types of books that you don't like? Why?

“Robert Moses and the Modern City: The Transformation of New York,” by Hilary Ballon.  This “reexamination of Moses” comes across as too conveniently aligned with a suspect agenda to justify a return to large scale top-down planning.*

(*  Submitting this particular response was difficult.  The answer to the question had to be limited in length and I kept getting back messages I had to shorten it to be under the "maximum 255 characters long" even when I was under that character.  When I got down to 196 characters the program accepted my answer.)
Here is the response I got from the electronically available reference librarian.  Portions of it, as you likely can tell, were cut and pasted from elsewhere (usually text available in multiple locations on the internet including publishers websites) and I have highlighted those sections hyper-linking back to such other locations where the text can be found. Only one book description could not be found on Amazon, the one about U.S. Supreme Court Justice Sotomayor.  Amazon's description was, in this case, a somewhat customized version.  I did not, as predicted, have to wait a whole week to get my response back from email address: `AskALibrarian@oclc.org'.  I sent in my request middle of the day Friday and the response came back to me at the end of the day the following Monday.
Greetings from Brooklyn Public Library

Dear Mr. White,

Thank you for using Bklyn BookMatch! Based on your interests, I’ve created a customized reading list for you. The books I've selected cover a wide range of topics and interests, much like your impeccable reading taste.  In the list below you will find titles focused on technology, economics, the natural world, and more.  Please feel free to respond with any feedback.  Enjoy!
Based on your interest in economics and politics:

1.  Capitalism: A Ghost Story by Arundhati Roy
Based on your interest in economics and technology:
2.  Too Big To Know by David Weinberger
Based on your interest in important people and their impact in today's world:
3.  My Beloved World by Sonia Sotomayor

With startling candor and intimacy, Sonia Sotomayor recounts her life from a Bronx housing project to the federal bench, a progress that is testament to her extraordinary determination and the power of believing in oneself. She writes of her precarious childhood and the refuge she took with her passionately spirited paternal grandmother. She describes her resolve as a young girl to become a lawyer, and how she made this dream become reality: valedictorian of her high school class, summa cum laude at Princeton, Yale Law, prosecutor in the Manhattan D.A.'s office, private practice, federal district judge before the age of forty. She writes about her deeply valued mentors, about her failed marriage, about her cherished family of friends. Through her still-astonished eyes, America's infinite possibilities are envisioned anew in this warm and honest book, destined to become a classic of self-discovery and self-invention, alongside Barack Obama's Dreams from My Father.
Based on your interest in economics and technology:
4.  Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig
Based on your interest in the natural world and its connection to man and humankind:
5.  The Bonobo and the Atheist: In Search of Humanism Among the Primates by Frans de Waal
In this lively and illuminating discussion of his landmark research, esteemed primatologist Frans de Waal argues that human morality is not imposed from above but instead comes from within. Moral behavior does not begin and end with religion but is in fact a product of evolution...Rich with cultural references and anecdotes of primate behavior, The Bonobo and the Atheist engagingly builds a unique argument grounded in evolutionary biology and moral philosophy. Ever a pioneering thinker, de Waal delivers a heartening and inclusive new perspective on human nature and our struggle to find purpose in our lives.

I've also made a booklist for you in our online catalog: http://bit.ly/1xy8Zek.  You'll notice a few more titles not mentioned above - these are just a few more recommendations.  Once you sign in to your account, you can easily place holds on any or all of these books. 

Please don't hesitate to reply to this message letting us know what you think about my suggestions and this service. Happy reading!
My response?  It's below.  I had to be honest:
I love these recommendations.  Thank you.

Interestingly, Sonya Sotomayor was a board member at one of the government agencies where I once worked, and, at one point, I wrote an article in the form of an "open letter" to her about eminent domain abuse.

As for the bonobos, that is relevant to some of Francis Fukuyama's discussion.  I recall, we currently believe that chimps and bonobos are both more closely related to humans than they are to each other-  Hmm.  Figure that out.  (Link below.) Francis Fukuyama focused in on the behavior of chimps and might have gone in a somewhat different direction in his thoughts if he'd focused on bonobos.
This librarian sounds like a nice and interesting person.  Wouldn't you like to meet her in person?
The email I got back gave her name and specified her title as "Librarian, Brooklyn Public Library."  Here are some other things I learned about her.  Her email told me something that I had not gleaned from BPL president Linda Johnson's presentation to the BPL trustees: She was responding using an OCLC ("Online Computer Library Center, Inc.") email address, not a BPL email address.  On the web page that popped up for OCLC it says about OCLC: "The world's libraries connected. . . . OCLC members make a collective impact, worldwide."

Disappointed, I thought that maybe my friendly assigned reference librarian wasn't a New Yorker and didn't work for the BPL.  But on Facebook I learned hearteningly that she lives in New York City (likely even in Brooklyn!- Williamsburg to be exact), came from Chicago, Illinois after studying Library Science at University of Illinois at Urbana-Champaign.  From Twitter I learned she is a poet.  A real person living in my city doing real things!  She is even a trained librarian working as a librarian, but apparently she doesn't work on staff for the BPL.  She works at Teachers College, Columbia University.  Maybe my quick response from her was by reason of her weekend moonlighting.

In promoting a just announced (but, like many others, very long in the works) plan to to redevelop the Sunset Park Branch Library into a "Mixed Use Real Estate Opportunity" the BPL is having conversations directed at the local community promoting this proposed redevelopment by telling people, in part, that the the development can be viewed as a jobs program (35 construction jobs during an estimated two years of construction) because construction means jobs.  But, think, if the administration of libraries can be conceived as a jobs program as the BPL was making the case, why not consider that the jobs that librarians do are important jobs to keep and provide. . . worth publicly paying for even when that means setting aside worship of technical efficiencies?

During the Great Depression the WPA (the Works Progress Administration) hired artists and theatrical performers to ply their trade, essentially almost to be themselves.  Mightn't it, in this day's challenging economy, make sense for the government to hire and pay people just to be smart, well read, informed and, without an agenda, informatively out and about and intermingling with our local communities, particularly with the goal of being in service to others, those most intent on self-educating themselves?

Would it be important to insist that these people focus on being "efficient" in their interactions, doing as much as possible with as few bodies as possibe?  Did we/should we have demanded this of the WPA artists and performers?

`Efficiency' may not be all that it's cracked up to be.  The great urbanist thinker Jane Jacobs, a proponent of the benefits if diverse, differentiating and naturally evolving development in books like "The Nature of Economies" looked askance at the "supposed efficiency" of monopolies and, with Detriot being one of her examples, she denounced specialized efficiency at the expense of diversity, considering it a prelude to economic stagnation.  Economies that sacrifice ample diversity, like ecosystems that do so, are less adaptable, less stable, less resourceful, less able to improvise, less able to develop and evolve.  To Jacobs, an economy with few sorts of niches for people's different skills, however efficient, is one that suffers impoverishment.

The proposed redevelopment of the Sunset Park Library weeks ago is the first time such an announced redevelopment of a library by the BPL has involved a proposed increase of library space rather than another shrinkage since Citizens Defending Libraries has been on the scene shedding light on the BPL's real estate ambitions.  It would be flattering to think that the increase in size as part of the proposal is even a reaction to knowing that Citizens Defending Libraries is on the scene.

Ironically, the BPL is hinting that it may give the Sunset Park community what it wants, a library that might well wind up being larger than the small size down to which the BPL is concurrently proposing to shrink the central destination Brooklyn Heights Library.  The Sunset Park community wants a new library that is two stories above ground, and for that space to be more than the 17,000 square feet the BPL initially proposed.  The folks in Sunset Park say they miss the two-story, above-ground Carnegie library the neighborhood once had that was larger than the box that has replaced it there now.  The BPL is responding that it sees the sense of what the community is requesting and is looking to accede if it can secure some increased funds.  By contrast the BPL is planning that the Brooklyn Heights Library would consist of only 15,000 square feet of such above-ground space with 6,000 square of ancillary below-ground space.

While the Sunset Park library is proposed to have more space, the BPL has not fully updated its sales pitch and is using many of the same words to describe why its hurried priority must be redevelopment of the Sunset Park library to make it `work better.'  (The BPL currently now rents out space in the library to Workforce1 that it could easily reclaim to expand without redevelopment.)   If you know the code words, the same words and overlapping phrases may hint at the same kind of staff and librarian reductions for Sunset Park as the BPL envisions for Brooklyn Heights:  "probably the most important issue . . .  this current layout. .  is not adequate to the services that are needed in the community today. . .  we need more technology."  The BPL spokesperson also again referred cryptically to existing space that "is not usable."  That phrase, used quite frequently in PR promotions for shrinking libraries, seems to refer often to space used by librarians and for them to exist in.

Said BPLs spokesperson to the community (emphasis supplied):
This branch isn't laid out in an ideal fashion.  I don't want to. . .  [He then named two Librarians by name], they deserve lot's of space, but unfortunately, in this branch right now, there's probably more staff space than is ideal.  So if we can start from scratch we can get that mixture, that balance of staff space and public space.  We can probably get a little closer to where we should be.  Again, we have the opportunity to create a modern, technology rich and welcoming library.
Well now that I have my book recommendations from my email pen pal of a librarian I'll have to plan to get the books.  But since books, like librarians, are disappearing from the library and are not available at the library until ordered (like Amazon), I'll have to order them to come in to my library from where the BPL now keeps its much smaller collection that mysteriously `floats.'  The BPL administration says the `floating' books not at the libraries you visit can be available with “usually a week’s turnaround”  (that's a week after the previous week's expected turnaround with the email reference librarian).  The time might even be less, but reports are coming in that it often takes nine to eleven days to get ordered books.

I'll try to wait as efficiently as possible.

Sunday, November 16, 2014

Is Forest City Ratner, As Victor, Writing Our History?- WNYC's Press Release on Appointing Forest City Ratner's MaryAnne Gilmartin to Its Board of Trustees

“History is written by the victors.”   That's certainly the old adage that reflexively gets accepted as true by so many of us even without knowing who first said it.

But first the victor must wrest the pen that writes history into its own grasp. . .  That’s what Forest City Ratner seems to be trying to do when it comes to Atlantic Yards and its exploits in New York City.

In October Forest City Ratner’s Chief Executive Officer MaryAnne Gilmartin was appointed to the board of trustees of the board of New York Public Radio, better known as WNYC and its sister station WQXR, according to the press release appointing Gilmartin, “America's most listened-to AM/FM news and talk public radio stations.”  How did that happen?. . .

. . . Certainly not without a lot of maneuvering and purposeful intent on the part of Forest City Ratner.

The WNYC public radio stations are not are not only the “most listened-to” stations; there is also an implicit agreement with their listeners that, because they are listener financed, they can be trusted as a much more reliable source of earnest news reporting, an alternative free from the corrupting influence that saturates commercially owned and operated news media.  Accordingly, for instance, the idea that the WNYC family of stations provides in-depth news and information that is vastly superior to the kind of press release-conduit journalism that commercial stations put out was propounded again and in the sales pitches made during WNYC’s last fund-raising drive, just as that idea has been highlighted in the many years of fund-raisers before.  This most recent WNYC fund-raiser was subsequent to Ms. Gilmartin’s appointment to the WNYC board.

Ms. Gilmartin’s arrival at her policy-making trustee’s position on the WNYC board is reminiscent of another board’s takeover and ensuing 180-degree policy changes seen most clearly with respect to Forest City Ratner’s Atlantic Yards: That of the once venerated Municipal Art Society.

The Municipal Art Society was once thought of as representing the public and standing up to developers in the face of abusive development.  Kent Barwick, when he was the head of MAS, called Atlantic Yards “the poster child for what goes wrong when process is ignored. . . a poorly designed project that has polarized the community and that squanders both opportunity and public trust.”   Not so long ago, MAS had scores of forums about development in the city invoking the name and principles of Jane Jacobs in which, while the moderators kept civil order, the Atlantic Yards mega-monopoly was excoriated by expert panelists and attending public alike, for a zillion villainous transgressions against the public interest.
  
More recently, after an orchestrated reconstituting of the board, essentially, as it was disclosed to me, happening as something of a coup, MAS has reversed itself to the extent that many no longer regard it as representing the public.  This new version of MAS has given not one, but two, awards the to the Atlantic Yards mega-development, essentially praising Forest City Ratner for the kind of neighborhood destruction that was previously decried, an absurdity that’s siren for satire, essentially an award for “preserving a swath of Prospect Heights by tearing it down to build the Ratner Prokhorov Barclays arena while letting the rest of the destroyed neighborhood acreage lie fallow for a few decades.”   (See: Monday, June 16, 2014, Ratner, Gilmartin & the MAS Onassis Medal: selective memory, glitzy gala, and enduring dismay.)

Just a few days ago I ran into a woman who was a new resident of New York who, without knowing any of the history of how MAS’s mission has been recently redirected, told me that she had attended a MAS event and unexpectedly found it an almost unbelievably depressing pro-development spectacle.  I don’t know. .  I wasn’t there, but I do know that there has been a massive exile of those who used to be involved with MAS, including its former president, Kent Barwick, to resurrect The City Club of New York.  What’s left of the former Municipal Art Society seems to have gobs of money, but its soul is and moral compass are lost.  In its place, the new, leaner City Club is shaping up credibly to fill in the void of what MAS once was.

There are, of course, other well-worn sayings about history.  One of the best known is George Santayana’s “When experience (which is history) is not retained...infancy is perpetual. Those who cannot remember the past are condemned to repeat it,” which may be viewed as something of a retread of Cicero’s “Those who have no knowledge of what has gone before them must forever remain children.”  Malcolm X took a crack at essentially the same sentiment with: “History is a people's memory, and without a memory man is demoted to the lower animals.”

It provokes thought and fright to consider that when history is written by the victors it will be rewritten so that those things that should never have happened in the first place will happen again virtually by design.  In other words George Orwell’s, “Whoever controls the past controls the future.” 

This brings to mind another adage about victors and victory: “To the victor go the spoils.”  Getting to write history, the ability to control the past and thereby own the future too, may be viewed as just a subset of the spoils that the victors get to walk away with.

It is not then surprising that at the groundbreaking for the Ratner Atlantic Yards arena, Ratner and Atlantic Yards supporter Mayor Michael Bloomberg seemed to focus wishfully about his expectation of public forgetfulness to cement the highly controversial victories: “nobody's going to remember how long it took. They're only going to look and see that it was done.”  Such ablution via deficient memory extends to the cleansing almost any means-to-an-end in public debate and governance if only results matter.”  

The sad thing, if Forest City Ratner gets to write the history of Atlantic Yards, is that such writing of our history will not just be the consequence of victory, but another victory unto itself.  Although Forest City Ratner overpowered the public interest and the community to achieve many things it ought never to have achieved, I think it is quite fair to say that the community won a good share of the battles.  The most important was the laying bare of Forest City Ratner’s deceptive practices. That's more important even than the successful adjudication respecting such practices when the community won its environmental lawsuit.  These victories helped ensconce a public understanding of the abuses in the competing narratives of what happened.  In this way, the predatory Forest City Ratner cat was belled to warn those mice who might appeal to the cat as its future meals.

Evisceration of WNYC and the Municipal Art Society is a way of silencing that bell on the cat.  The “Braveheart” quote about writing history, put in the mouth of Robert the Bruce, is “history is written by those who have hanged heroes” with a concordant implication that those dead heroes and their deeds are then written out of our pasts.  That saps the spirit of resistance even further.  The heroes of the Atlantic Yards fight and other community battles may now be largely exhausted, having worked unpaid against well-financed minions.  They may have paid the price of many wounds, made many sacrifices.  We may even now think of some of them as the equivalent of the dead on the battlefield, but it’s truly grievous to think that all their hard work and truth that was brought to light by, for instance, the “No Land Grab” team or the “Battle For Brooklyn” documentary would be forgotten.

Maybe history will be rewritten so that WNYC’s future listeners or those going to next year’s MAS functions devolve, uninformed, into the feckless, perpetual infants or children of Cicero’s and Santayana’s admonitions, but on its own side of the fence Forest City Ratner is not going to forget its perfected playbook.  Similarly, other developers seeing what Ratner got away with will remember and emulate.  Which is to say that whatever battles have been won or lost it is still an ongoing war.

That brings us to what should be a number of critical realizations about the road we are not yet at the end of.  Yes, there is a question as to whether other developers will use, throughout the city, tactics Forest City Ratner used with respect to Atlantic Yards and its other New York City exploits going back to at least 2002, and there is the likelihood that Forest City Ratner’s tactics on future projects will resemble those its used on Atlantic Yards, but. . . .

. . .  Anyone who thinks that Forest City Ratner has won the Atlantic Yards war thinks in very circumscribed terms.

Completion of the Atlantic Yards mega-development from this point on could still take as much as another forty years.*  Even now, twelve years after Forest City Ratner started moving in to take over a swath of Prospect Heights with the threat of eminent domain, it has built only the arena (that's not even technically finished at this point as a corrective new secondary green roof is being built).  It has not built any housing.  It has not replaced any of the residential units it destroyed, including the low-income units it will never actually replace.  It has not replaced the businesses it evicted.  The one attempt Ratner has made to build a residential building stands halted, mired in a lawsuit about incompetence and may have to be torn down to be built again from scratch, its original estimated cost of $155 million now rising to perhaps $215 million or even $265 million.
(*  Even though the new, most recent, contractual deadline now theoretically stands as 2025, with the deal subject to perpetual negotiation with Forest City Ratner in the position of a politically muscular monopoly, no future terms can be assured.)
Forty years, or however many decades it actually takes to complete Atlantic Yards, affords ample opportunity for the community, albeit exhausted, to insist, as it should, that the mega-project be divided up and bid out to multiple developers, restoring the streets, sidewalks and avenues that Forest City Ratner has privatized.  Conversely, it affords opportunities galore for Forest City Ratner to reenact more times than we will be able to count what it has done at juncture after juncture, renegotiate repeatedly the terms of its monopoly to shift benefits increasingly in its favor.

In fact, as an example of how easily things can go one way or another, just recently in June, hardly anytime at all before the residential constructions problems and ensuing litigation about it was to be disclosed in August, something that would have made Ratner extremely vulnerable to finally losing monopoly control over the project especially given the community's litigation victory, Ratner slickly maneuvered, taking advantage of a new administration under the incoming mayor to renegotiate new terms for its deal (and more subsidy), once again more to its advantage.  Not knowing how how income eligibility bands were being rejiggered in the background, the representatives who ventured to negotiate for the community were snookered in the deal they'd probably have been better off never making no matter how good it was made to sound. Without cinching this deal, Ratner might have failed in his desperate deal selling a portion of the mega-project to the Chinese government. 

Consequently, Forest City Ratner is not presently the victor seeking to write history.  Still not yet the victor, it is simply doing what it has done from the start, seeking control of the news media and those who write the news in order control the narrative, in order to be the victor when all is said and done. . . .

If ever a definitive tale is told about the still-ongoing Atlantic Yards saga it is virtually certain to be in the form of the book on the subject that Norman Oder is writing.  Mr. Oder writes Atlantic Yards Report (currently retitled “Atlantic Yards/Pacific Park Report” in view of the fact that the Ratner firm euphemistically rechristened its project to divorce its self from years of bad press).  Atlantic Yards Report originally began as the “Times Ratner Report” much of its earliest focus being about how irresponsible and misleading the coverage of Atlantic Yards by the New York Times was. 

Conception of the Atlantic Yards project goes back to the summer of 2002.  In February of 2001 an eminent domain land deal was reached that turned Forest City Ratner into a real estate partner with the New York Times to construct its new headquarters.  For more about how the questionable reporting by the Times undoubtedly assisted Ratner’s Atlantic Yards to advance and ultimately succeed as far as it has, see:  Sunday, June 26, 2011, “Page One: Inside the New York Times” Reviewed; Plus The “New York Times Effect” on New York’s Biggest Real Estate Development Swindle.

This means that rather than being anything new, Forest City Ratner's encroachment into the theoretical bastion of public radio and public broadcasting is just a shifting of the previous line of influence, a pushing forward to dominate more completely by extending tactics previously used successfully by Ratner.  In fact, while public radio has done better in the past to escape the influence of Ratner and the real estate industry, the same cannot be said of New York City’s WNET public television station where criticism of the city’s real estate is never heard, but Forest City Ratner has gotten great promotion on Charlie Rose.  (See:  Monday, April 2, 2012, Charlie Rose Does Infomercial For Forest City Ratner and Tuesday, April 3, 2012, Channel 13, New York's Premier Public Television Station, Provides Promotion For The Ratner/Prokhorov Barclays Basketball Arena: What To Do About It?)

Ratner is also well infiltrated into the Brooklyn Academy of Music and the Brooklyn Museum.

Ms. Gilmartin’s first WNYC trustees meeting is scheduled to be Wednesday, December 3, 2014.  Before that, Tuesday November 18, 2014, the WNYC Community Advisory Board is meeting at 7:00 PM at St. Francis College in Brooklyn Heights.  The Community Advisory Board is supposed to take comment from the public about the station’s operations.  At their last meeting the CAB groused that far too few members of the public come to their meetings.  (With Gilmartin's appointment  they may be on the verge of ironic solution.) 

The WNYC Community Advisory Board was established to comply with the Public Telecommunications Act the purpose of which extends to providing “a source of alternative telecommunications” that will be “responsive to the interests of people.”  To receive public funds public broadcasters must have Community Advisory Boards to review the “programming goals established by the station, the service provided by the station, and the significant policy decisions rendered by the station.”  (emphasis supplied)

Under that rubric, it would seem that Ms. Gilmartin’s appointment to her policy-setting position on the WNYC board should be of vital concern to the CAB.  To argue, contrarily, that it is only a board appointment and that the CAB should wait and be concerned only when station policy actually changes after enough board members of Ms. Gilmartin’s ilk have been appointed would be to say the CAB should react to close the barn door only after there has already been an irreversible escape of the horse.

CAB members face a conundrum in regard to whether they will screw their courage to the sticking point and object to Ms. Gilmartin’s appointment.  According to the by-laws of the Community Advisory Board: “CAB members are subject to the approval of the [WNYC Board of Trustees] or its designees, including members re-nominated for a second term.”- . . .

. . . . That means that, by getting appointed to the WNYC Board of Trustees, Forest City Ratner head MaryAnne Gilmartin now has a say-so about who is on the Community Advisory Board supposedly watch-dogging her implementation of station policy.

Although the Community Advisory Board should probably be recommending Gilmartin's removal from the board and holding up her appointment as an example of what never ought to be done again, if they do, it could subject their members to her vengeance.

Although WNYC is keeping confidential more specifics and the deliberations that were involved, we know that the Trusteeship Committee (comprised of the following Trustees: Tom Bernstein, Martha Fleischman, Anton Levy, Herb Scannell, Lauren Seikaly, Peter Shapiro, Susan Solomon, Nicki Tanner, Andrea Taylor, Keith Thomas, Cynthia King Vance, Laura Walker and Alan Weiler) nominated Forest City Ratner CEO MaryAnne Gilmartin for trusteeship after an evaluation they were supposed to make of her qualifications and suitability for service and probably someone on the committee identified Ms. Gilmartin as a potential candidate for trustee.

Since WNYC is not telling us we have to guess while noting that it could even have been WNYC president Laura Walker who pushed Gilmartin's nomination forward.

A hint that Ms. Gilmartin might have been coming to the WNYC board involved her bizarre appearance back in July accompanied by WNYC president Laura Walker fluffing up a Brian Lehrer show segment about how to get `a good night’s sleep,' something, as commented by me at the time, it's questionable that Ms. Gilmartin actually deserves.  Giving a burnishing heft to Ms. Gilmartin's credentials though not necessarily making her being there seem less odd, Arianna Huffington was also a part of this surreal segment. Oh, Oh, WNYC!  Oh Brian!  See: Wednesday, July 16, 2014, On Brian Lehrer, FCR's Gilmartin reports on CEO Sleep Experiment.

If and when WNYC policies begin to change subsequent to this Gilmartin appointment it is doubtful that we see that change manifest in Brian Lehrer losing his prominent morning slot in the near future: He is expert at what he does, beloved by his audience, young enough to be around for a long time and, although moderating with reasonable fairness, he has never expressed hostility toward Atlantic Yards.  We would be more likely to see change creep in with a replacement of a retiring Leonard Lopate, an older broadcaster who has more regularly acknowledged the legitimate basis for the community's dissatisfactions with the megadevelopment.  It would be nice if Mr. Lopate were around to interview Mr. Oder when his awaited book comes out, but who knows when that will be as the Atlantic Yards saga continues to lumber forward in surprising ways frustratingly postponing any neat point at which to wrap up.  Mr. Lopate could likely be replaced by someone who, on the spectrum, is more more likely to be confused with a corporate lapdog than Brian Lehrer, perhaps friendlier to developers like Ratner than even Charlie Rose.

In pertinent part the press release announcing the appointment of Ms. Gilmartin to its board reads in cheery PR speak as follows:
NEW YORK PUBLIC RADIO ANNOUNCES FOUR ADDITIONS TO ITS BOARD OF TRUSTEES

Richard Brail, MaryAnne Gilmartin, Loretta Brennan Glucksman, and Brad Whitman Named to the New York Public Radio Board of Trustees

(New York, NY – October 9, 2014) – New York Public Radio today announced that Richard Brail, Managing Director and Head of the Media, Entertainment, Communications and Technology Group at Peter J. Solomon Company, and MaryAnne Gilmartin, President and CEO of Forest City Ratner Companies, have been elected to its Board of Trustees. Loretta Brennan Glucksman, Chairman Emeritus of the American Ireland Fund, and Brad Whitman, Vice Chairman in the Financial Institutions Group at Morgan Stanley, were also recently elected to the Board at the Spring meeting of the Board of Trustees.
As a 501(c)(3) not-for-profit organization, New York Public Radio is governed by an independent Board of Trustees that meets regularly throughout the year. There are currently 35 NYPR Trustees, headed by Cynthia King Vance, Chair. Information on all Trustees can be found here.

“Rich, MaryAnne, Loretta, and Brad bring vast experience in business, media and non-profit governance that will advance both the work of the Board and the mission of New York Public Radio,” said Laura R. Walker, President and CEO, New York Public Radio. “I look forward to collaborating with them to keep New York Public Radio at the forefront of digital innovation, award-winning content creation and enterprise journalism that enriches the lives of New Yorkers and audiences around the world.”

“I am delighted to welcome Rich, MaryAnne, Loretta, and Brad to New York Public Radio’s Board of Trustees,” said Cynthia King Vance, Chair, Board of Trustees, New York Public Radio. “These accomplished leaders bring a passion for public radio and new and valuable perspectives to a highly engaged Board of Trustees. We are lucky to have them join us as we reach for even more ambitious heights at New York Public Radio.”

* * * *

MaryAnne Gilmartin is President and Chief Executive Officer of Forest City Ratner Companies. She has been point person in the development of some of the most high-profile real estate projects in New York City. Ms. Gilmartin led the efforts to build Barclays Center and Pacific Park Brooklyn, a 22-acre mixed-use development. Ms. Gilmartin also oversaw the development of The New York Times Building, designed by Renzo Piano and New York by Gehry, the tallest residential building in the Western Hemisphere, designed by Frank Gehry. In addition to these projects, Ms. Gilmartin has managed the commercial portfolio at MetroTech Center in Downtown Brooklyn, which consists of 6.7 million square feet of Class A office space. Ms. Gilmartin served proudly for over 7 years on the New York City Ballet Advisory Board. Currently, Ms. Gilmartin serves as a Board Trustee for the Brooklyn Academy of Music (BAM); a Member of the Board of Governors of the Real Estate Board of New York (REBNY); and as a Member of the Industry Advisory Board of the MS Real Estate Development Program at Columbia University.

* * * *

New York Public Radio is New York’s premier public radio franchise, comprising WNYC, WQXR, The Jerome L. Greene Performance Space, and New Jersey Public Radio, as well as www.wnyc.org, www.wqxr.org, www.thegreenespace.org, and www.njpublicradio.org. As America's most listened-to AM/FM news and talk public radio stations, WNYC extends New York City's cultural riches to the entire country on-air and online, produces award-winning programming for local and national audiences, and curates the best offerings from networks NPR, Public Radio International, American Public Media, and the British Broadcasting Company. WQXR is New York City's sole 24-hour classical music station, presenting new and landmark classical recordings as well as live concerts from the Metropolitan Opera, the New York Philharmonic, and Carnegie Hall, among other New York City venues, immersing listeners in the city's rich musical life. In addition to its audio content, WNYC and WQXR produce content for live, radio and web audiences from The Jerome L. Greene Performance Space, the station's street-level multipurpose, multiplatform broadcast studio and performance space. New Jersey Public Radio extends WNYC’s reach and service more deeply into New Jersey. For more information about New York Public Radio, visit www.nypublicradio.org.

# # #   
Press release about Gilmartin appointment, page one, click to enlarge
Press release about Gilmartin appointment, page two, click to enlarge
Ms. Gilmartin brings a "passion for public radio and new and valuable perspectives to a highly engaged Board of Trustees"?  And, we are lucky to have Ms. Gilmartin join WNYC "as we reach for even more ambitious heights at New York Public Radio.”  Really?  Plus there's that cleverly oblique reference that Ms. Gilmartin has been the "point person in the development of some of the most high-profile real estate projects in New York City."*
(*  Commenting on this article Norman Oder in Atlantic Yards/Pacific Park Report post 11/18/2014 writes:  "Forest City has a passion for shaping perception--such as the erasing-history effort to rename Atlantic Yards as Pacific Park. - So even the capsule biography of Gilmartin, surely supplied by her office for the press release, is part of that effort [incorporated in the WNYC Press Release!]. According to the press release, Gilmartin `led the efforts to build Barclays Center and Pacific Park Brooklyn, a 22-acre mixed-use development.'- Actually, Pacific Park Brooklyn hasn't been built yet. The first tower is stalled. The second break ground next month.")
Another item in the press release that's probably of interest in this context is that Brad Whitman also being appointed to the board, although now with Morgan Stanley, came from Barclays Bank just months before where he was head of mergers for financial institutions.  Barclays is the bank whose name is on the Ratner arena. That prominent public spot was sold to it as advertising, confusing what the public should think about its misconduct.  The world is too entirely too small, isn't it?
(click to enlarge) The kind of public interest advertising we might see in the subway if the public were coming up with funds for what's posted there.  Instead, the recidivist Barclays has the subway station and publicly paid for arena named after it to wash away thoughts of its misdeeds.
Forest City Ratner has never done a project without deep publicly paid for subsidy and it has never done a project where it was selected by competitive bid.  Its modus operandi in pursuing its usually large scale crony capitalistic deals is to get on the political inside, buying elected officials with campaign contributions and then misrepresent what is going on, that which the public is getting and what the public is losing. 

For a little more background on this and Ms. Gilmartin's appointment, see: Saturday, October 11, 2014, The Forest City Ratner Cafe, at the Brooklyn Children's Museum, and Gilmartin's new role on WNYC board, Atlantic Yards Report- Atlantic Yards/Pacific Park Report- Atlantic Yards, Pacific Park, and the Culture of Cheating, Tuesday, December 1, 2009, Unfair Substitution of Fiction For Fact in the Atlantic Yards Dialogue and Wednesday, July 18, 2012, Noticing New York's Hearing Testimony Re New York City Housing Development Corporation's Subsidization of Ratner's Atlantic Yards Mega-Monopoly.

Am I being too inhospitable, too unwelcoming to Ms. Gilmartin's arrival at WNYC?  Should one's attitude be more of a civilized "live and let live" approach where commercial and noncommercial interests could cohabit in the public broadcasting space, exchanging ideas with he-said/she-said balances?  Would that be the right resolution?  Could we expect that cohabiting commercial interests in public broadcasting would restrain themselves and not use the usual tactics of superior financial resources to overwhelm? . .

. . I don't think so.   Public broadcasting is supposed to be the alternative to other broadcasting already steeped in and motivated by commercialism (dubbed the "vast wasteland" when public broadcasting was conceived- "endlessly screaming, cajoling commercials"), not another sandbox where commercialism can play in a different guise getting elevated to equal footing with the public interest and that which the public wants to pay for.

There are those reading what I write here who will say that public broadcasting is already too infected by and susceptible to the influences of commercialism.  Environmental Action has a current campaign against what are essentially bought and paid for pro-fracking advertisements on public radio:
"NPR has been accepting millions of dollars in "sponsorship" from the fracking front-group known as ANGA. In exchange for their support, NPR hosts like Steve Inskeep, Melissa Block and Audie Cornish routinely read messages that blatantly misrepresent the dangers of fracking to our planet and people.
(See: Fracking the signal.)
Indeed, too often NPR and APR's MarketPlace (we won't review the complicated pluralistic structure of public broadcasters here) have run one-sided stories about how good fracking will be for the economy that appear to have come straight from that industry's press department representatives.  But the fact that these inroads have been made is not a reason to let there be more.

No, Forest City Ratner and MaryAnne Gilmartin don't cohabit nicely in the sandbox with others and they don't share toys.  When they want the property that you have they take it for themselves by eminent domain, stealth, cheating, and dirty and brute politics.  And that is why MaryAnne Gilmartin should not be on the board of New York Public Radio setting policy, including news reporting and public dialogue policy, for the WNYC family of radio stations.

Friday, October 31, 2014

Plutocratic Class Warrior Stephen A. Schwarzman: Public Impoverishment When Such An Individual Gains The Economic and Political Upper Hand?

Stephen A. Schwarzman sees himself on one side of a class war, where when it come to protecting the preferential tax breaks he receives the rest of us are like Hitler.
Stephen A. Schwarzman, head of the Blackstone Group, has already been prominently cited in two columns by Paul Krugman, the Nobel prizewinning economist and New York Times opinion page columnist, as an example of a plutocratic class warrior who believes that the 1% must retain their supremacy over the rest of society, winning at any cost. (See: Plutocrats Feeling Persecuted, September 26, 2013 and Paranoia of the Plutocrats, January 26, 2014.)

Similarly, a recent short piece in the The New Yorker, Moaning Moguls, by James Surowiecki, July 7, 2014, focused in on the way a complaining and financially aloof Schwarzman aligns himself, class-wise, according to a we/they perception of the world:
You wouldn't think [Schwarzman would] have much to complain about. But, to hear him tell it, he's beset by a meddlesome, tax-happy government and a whiny, envious populace. He recently grumbled that the U.S. middle class has taken to "blaming wealthy people" for its problems. Previously, he has said that it might be good to raise income taxes on the poor so they had "skin in the game," and that proposals to repeal the carried-interest tax loophole-from which he personally benefits-were akin to the German invasion of Poland.
Is the bottom line that the wealthiest in society like Schwarzman should be living in fear that the political upper hand will be seized by those who will tax the rich (or simply eliminate the loopholes by which Schwarzman pays his income taxes at a preferential lower rate) to dispense largess to the poor or other strata of our society?  Au contraire!   While class warfare is real, is not a matter of what the wealthy might fear from the rest of us, but what the rest of us have to fear in the way of predation from the likes of Schwarzman: What do individuals such as Schwarzman do when they have the political and the economic upper hand?

Schwarzman, who has focused on profiting from buying homes of owners defaulting in the face of economic downturn, has in his role as New York Public Library trustee pushed for the selling and shrinkage of New York City's libraries, he has enthusiastically promoted investment in the environmentally costly practice of hydro-fracking with all its global-warming implications, he has invested in privatizing prisons and now, as is getting attention, we find that he has in a major, very nontransparent way been taking advantage of pension funds, including those of public employees.  Some of the pension fund handed over to Schwarzman's Blackstone were set up for the benefit of New York City and New York State employees.

Raiding Pension Funds

In Wall Street,” the 1987 film famous for its “Greed is good” Gordan Gekko character played by Michael Douglas, a key part of the plot is the disclosure of the unscrupulous lengths to which Gekko will go in dismantling an airline company, putting its employees out of work, in order to raid its pension fund.  The mindset epitomized thereby: An economic framework that works for and benefits a larger segment of society is up for grabs to be destroyed by monied interests playing an insider game to pile up ever greater wealth.  That was the 1980s.

Stealing from pension funds?  Is it worse when the pension funds that get hit are those of public employees?  And if you are a New Yorker paying New York taxes, what if those pension funds are for New York public employees?  The politically connected Stephen Schwarzman who keeps photographs of George W. and Laura Bush and Michael Bloomberg on his office desk has, Gordan Gekko style, been accused of robbing public pension funds, to build up his own personal wealth.  The accusations are worthy of consideration for all they imply.  See Zero Hedge’s Leaked Documents Show How Blackstone Fleeces, Taxpayers Via Public Pension Funds, by Tyler Durden, May 5, 2014 passing along an article by David Sirota at Pandodaily, LEAKED: Docs obtained by Pando show how a Wall Street giant is guaranteed huge fees from taxpayers on risky pension investments, May 5, 2014

Here’s some of the Zero Hedge summing up of the situation:
The following story by David Sirota at PandoDaily is simply excellent. It zeros in on the secretive and rapidly expanding relationship between private equity firms and the public pensions that invest in them. It shows a crony capitalist love affair greased by lobbyist influence peddlers known as "placement agents", as well as non-public agreements between PE firms and public pensions chock full of conflicts of interest, extremely high fees and underperformance. Unbelievably, in many instances the trustees of the public pensions are not allowed to know what funds the "fund of funds" invest in. This makes due diligence impossible, and in one particularly egregious example it led the Kentucky Retirement Systems to unknowingly invest in SAC Capital despite the fact it was under SEC investigation at the time.

Furthermore, with the Wall Street Journal reporting back in 2011 that $37 of every $100 dollars invested in Blackstone's investment pool comes from state and local pension plans, it appears that taxpayers are once again being fleeced by the financial oligarch class.

    * * *

The chief villain in this article will be no stranger to readers of this site. It is Blackstone . .
The main point of the PandoDaily article:
An increasing number of those pension funds are being stealthily diverted into high-fee, high-risk "alternative investments" that deliver spectacular rewards for the Wall Street firms paid to manage them - but not such great returns for pensioners and taxpayers.
According to the analysis of the leaked documents obtained:   
Taken together, the documents raise serious questions about whether the government employees, trustees and politicians overseeing major public pension funds are shirking their fiduciary responsibilities under the law when they are cementing "alternative" investment deals.
Fees Sapping Fund's Prospects of Investment Growth

These pension fund investments were not performing well because of the debilitating effect of high fees. Around the beginning of 2008 Blackstone launched its hedge funds; with a “fund of funds” approach where it steered clients’ money into other hedge funds in return for an additional fee.

When the Kentucky Retirement System was looking to invest about $400 million in Blackstone's Alternative Asset Management Fund (BAAM), which is a so-called “fund of hedge funds” the PandoDaily article says the leaked documents showed:
Blackstone was guaranteed whopping fees of 50 basis points plus 10 percent of any overall profits on retirees' money. In addition, the memo estimates 1.62 percent management fees and 19.78% incentive fees to be paid on top of the Blackstone fees to the underlying (and undisclosed) individual hedge fund managers in the "fund of funds."
And:
Pension officials made the decision to invest in the fund despite Blackstone then reportedly being under SEC investigation.
The Sunday’s New York Times Business Section of a week ago featured, front page, above-the-fold, a comprehensive article that, in just slightly more tempered New York Timesian business lingo, covered much of the same ground, with a few additions, as the Pando and Zero Hedge articles from last May. See: Behind Private Equity’s Curtain, by Gretchen Morgenson, October 18, 2014.

We’ll come back to ways in which that article, illustrated with a photo of New York City Comptroller Scott Stringer and featuring a quote from him, brings the question of these investments closer to home for New York taxpayers.

First, it would be worthwhile to note the way the compounding effect of `fees,’especially any accumulating proliferation of them, work to seriously gut an intended building up of retirement investments.  To say that “fees” are being charged might imply that valuable services are delivered in exchange, but, bottom line, one ought to suspect and fear the opposite.  PBS’s Frontline covered this point well in “The Retirement Gamble” (transcript is available).
If you Google images for “retirement three legged stool”
U.S. citizens have frequently been described as relying on a “three-legged stool” for their retirement, 1.) social security, 2.) presumably secure pensions, and 3.) invested personal savings that can also include 401(k) and IRAs.  Frontline covered how there has been a shift away from pensions (that covered 42% of Americans in 1972) largely to 401(k)s, originally “a corporate tax dodge” for high earners that “Nobody ever thought that this was going to apply to the rest of us.”
From Frontline's  “The Retirement Gamble”
Frontline explained the effect of fees in the context of the third category, invested personal savings that can also include 401(k) and IRAs.  One expert asserts that Americans don't know the price, quality or risk of what they are paying for when buying 401(k) retirement investments.  To lay it all out, Frontline correspondent Martin Smith talked with Jack Bogle, the founder of Vanguard, a company that offers some of the lowest-fee products on the market. Bogle succintly offers the advice “that if you want to improve your retirement outcome, make sure to minimize Wall Street's take.” * (Starting at 23:40 on the video- ignore the investment company promo ironically inserted at the very beginning of the PBS video.):
(* If social security is ever privatized as has been proposed all these considerations will come into play with respect to social security too.)
    MARTIN SMITH: Bogle gave me an example. Assume you're invested in a fund that is earning a gross annual return of 7 percent. They charge you a 2 percent annual fee. Over 50 years, the difference between your net of 5 percent - the red line - and what you would have made without fees - the green line - is staggering.

    Bogle says you've lost almost two thirds of what you would have had.

    JOHN BOGLE: What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compounding costs. It's a mathematical fact. There's no getting around it. The fact that we don't look at it- too bad for us.

    MARTIN SMITH: [on camera] What I have a hard time understanding is that 2 percent fee that I might pay to an actively managed mutual fund is going to really have a great impact on my future retirement savings.

    JOHN BOGLE: Well, you have to rely on somebody to get out a compound interest table and look at the impact over an investment lifetime. Do you really want to invest in a system where you put up 100 percent of the capital, you the mutual fund shareholder, you take 100 percent of the risk and you get 30 percent of the return?
Again, from Frontline's  “The Retirement Gamble”- Results of a 7% return vs. a 5% return
These same mathematical investment facts also apply to pensions of private companies and public employees although the risks and responsibilities for management of them and the costs have not been shifted over from the employers to the employers in the same way.  These mathematical investment facts apply to Blackstone and in the case of public employee pension funds, it's our elected officials like our state and city comptrollers who are responsible for making the decisions about what fees like this are to be paid to companies like Blackstone.

On the Political Inside- "Pay to Play"

That’s why it’s a problem when Blackstone and firms like it are making campaign contributions to the very same officials making those decisions.  You have heard of "pay-to-play"?  See: Do campaign contributions help win pension fund deals?,  8/28/2009.  Here from that article:
More than two dozen firms that have surfaced in a broad corruption investigation of public pension funds gave at least $1.97 million in campaign contributions to officials with potential influence over the funds' investments, a USA TODAY analysis shows.

The givers included private-equity giants such as the Blackstone Group, the Carlyle Group and the Quadrangle Group, the firm founded by Steven Rattner, who in July resigned as the White House point man for the auto industry rescue. The contributions are legal, and the firms haven't been accused of wrongdoing related to the giving.

    * * *

Officials of the Blackstone Group have similarly contributed to pension fund incumbents and candidates. The firm's chairman is co-founder Stephen Schwarzman, a former Lehman Bros. executive. Co-founder Peter Peterson retired as Blackstone's senior chairman in 2008.

Campaign finance records show Schwarzman; his wife, Christine; and Peterson gave a combined $30,000 to three candidates who ran in 2002 to succeed H. Carl McCall as state comptroller. Hevesi, the winner, got the most, $21,000. Separately, McCall received $25,000 from Christine Schwarzman for his unsuccessful bid for governor.

Blackstone has received about $1.74 billion in private equity- and real estate-related investments from the New York pension fund since 1993 and has been paid about $20 million in fees, said Whalen, the state comptroller's spokesman.

The firm has not been accused in the New York investigation.
See also Crains New York Business: Private equity donations to politicians uncovered- Staffers of firms gave money to officials with power to steer pension funds to range of investment advisors, by Hilary Potkewitz, August 28, 2009.
New York Attorney General Andrew Cuomo has been investigating pay-to-play accusations involving the state's pension plan and various investment funds, including Carlyle, for the past year. In June, the Carlyle Group agreed to pay a $20 million settlement, and change company policy to limit employee political contributions to $300.

Blackstone has not been accused of anything as a result of Mr. Cuomo's investigations. A Blackstone spokeswoman said that since at least 2006, the company has had a policy prohibiting employees from donating to campaigns for offices with direct oversight of public pension funds. That policy also requires approval from its general counsel for any campaign contributions.
And see, Final Alternatives Hedge Fund and Private Equity News: Ex-Blackstone Employee Pleads Guilty In N.Y. Kickback Scandal, May 13 2009.
A former employee of a placement agent now owned by the Blackstone Group has pleaded guilty to securities fraud as part of the widening kickback scandal at a New York State pension fund.
Putting this again in the context of the debilitating fees already discussed, we come across this article from the New York Post that ran four years ago during the last election for state comptroller.  Harry Wilson, the Republican candidate running for office against Democrat Thomas DiNapoli (who won and is now running again) likely knew what he was talking about because he was a former Blackstone principal.  See: A pension to slash, by Josh Kosman, August 1, 2010.
The former Blackstone Group principal who is the Republican candidate for New York State Comptroller believes the state should consider decreasing its allocation to private equity in its pension funds.

Most PE firms, he said, do not outperform the S&P 500 after fees.

"I'm not a big believer in alternatives," Wilson told The Post. "I don't own a lot of alternatives in my portfolio."

"To outperform the markets is hard and then when you charge large fees on top of that it is really hard."
The article points out that:
The state as of March 31 had 9.3 percent of its $133 billion invested in private-equity funds, and another 9 percent in other "alternative investments" like real estate and hedge funds.
Idea That Pension Benefits Are Too Generous Anyway Finds Home at Schwarzman's Blackstone

Maybe candidate Wilson had a change of heart after leaving Blackstone but indications are that for those at Blackstone their heart is not in benefitting the pensioners; the job they are being paid enormous fees to do.

Blackstone’s Byron Wien, vice chairman of New York-based Blackstone's advisory group, said retiree benefits were "too generous."
"The retirement benefits for state workers, really not only in New York, California and New Jersey but throughout the country, are very generous, too generous," Wien said in response to a question about U.S. state budget deficits during a Jan. 5 presentation of his forecast, according to a transcript. "We literally can't afford the benefits we have given our retirees in state and local governments and we have to change that."
(See: Blackstone Seeks to Appease New York City Pensions After Wien's Comments, by Cristina Alesci and Jason Kelly, May 26, 2010.)

Wein’s remarks sound very much like Goldman Sachs CEO Lloyd Blankfein when he said that the public was going to have to lower its expectations about “entitlements and what people think that they're going to get.  Because they're not going to get it.”  It has been suggested that Mr. Blankfein should, like Mr. Schwarzman, be made one of the trustees to whom we entrust the care of our New York City libraries.  

What did Stephen Schwarzman say in response to Mr. Byron’s remarks and the objections that consequently arose?
"Byron will play a central and invaluable role in providing direction and guidance,"
While Mr. Wien's heart doesn’t seem to be in helping pensioners, he may also lack the talent that would entitle him to take fees to do so.  See:  Byron Wien's Atrocious "Forecasting" May Have Cost Blackstone Hundreds Of Millions, by Tyler Durden on 01/06/2011.

Another Level of Asset Stripping: Pension Funded Job Losses Through Blackstone

While politically luring public pension funds into underperforming high-fee investments is one form of public asset stripping, New York’s pensioners may also be chagrined to learn that the funds they had invested with Blackstone entailed another layer of public loss, one that U.S. Senator Charles Schumer was duty bound to complain about when it came to light.  During the Democratic Convention in the 2012 presidential race Bain Capital was excoriated for jobs it was said to have destroyed in corporate takeovers.

Blackstone engages in the same sort of dismantling of jobs and companies so, by investing in Blackstone, New York’ pension funds (two New York State public employee pension funds and four New York City pension funds) were causing jobs to be lost in Fulton, New York.  A Birds Eye Foods factory was ultimately closed by Blackstone's subsidiary after the union’s and Senator Schumer’s fruitless protests.  See Bloomberg’s: Pensions Find Private Equity Bites as Blackstone Cuts Job, by William Selway and Martin Z. Braun, February 23, 2012 and the very similar, slightly truncated Pension and Investments: NY pension funds find private equity controversy as Blackstone cuts jobs, by Bloomberg, February 23, 2012.
The new owners, Pinnacle Foods Group LLC, a company held by the private equity firm Blackstone Group LP (BX), [“the world's largest buyout firm”] closed the factory and fired 270 workers. Kimber, 64, got eight weeks severance for her 12 years on the job and lives with her 37-year-old unemployed daughter in the rust-belt town of about 12,000, northwest of Syracuse.

“They just used us. That’s exactly what they did,” Kimber said. “And then they kicked us to the curb.”

    * * *
Private equity executives, including Blackstone managing director and Pinnacle Foods director Prakash Melwani, have helped stock Romney's campaign war chests.
    * * *

New York Comptroller Thomas DiNapoli, the sole trustee of New York's $140 billion retirement fund, declined to comment. New York City Comptroller John Liu declined to comment. John Cardillo, a spokesman for New York state's Teachers' Retirement System, declined to comment.

    * * *

In January 2010, U.S. Senator Charles Schumer, the New York Democrat, held a press conference with workers in Fulton, saying he would keep pressuring the company until all the jobs were safe. Schumer said he called Stephen Schwarzman, Blackstone's chairman and co-founder, and asked him to spare the factory.
Ironically, Charles Schumer’s wife, Iris Weinshall, has now taken the position of Chief Operating Officer at the New York Public Library, where, because Schwarzman is a trustee there, she, in a sense works for him as one of her bosses.  She replaced Chief Operating Officer David Offensend who came to that position from Evercore, LLP another private equity and hedge fund firm that was spun off from Blackstone.  The universe of those exercising influence and power is remarkably small.  (So small, in fact, that Offensend's wife, Janet, wound up as a key trustee at the Brooklyn Public Library while it implemented plans tracking the NYPL's similarly selling and shrinking Brooklyn's libraries.)

As the articles note, while New York City Comptroller John Liu did not comment on this factory closing, in another situation where another private equity firm was involved in closing a factory in Cleveland over the objections of investing pension funds whose monies were being used, Liu wrote:
New York's pension funds do not wish to be investing in job loss or in a global `race to the bottom.
Fulton’s Republican Mayor Ronald Woodward, gets the concluding word in the article, putting it terms of class:
"What you're doing by doing that -- you are systematically eliminating the middle class," he said. "You're going to be rich or you're going to be poor. There's no in between."
Placement Agent Fees

Blackstone, and especially Schwarzman, was also openly going after and championing yet another level of fees that would sap pension fund investments, “placement agent fees.”  When I was in government with the state finance agencies we were confronted by firms that, with political introductions, proposed that they should be inserted as a new level of intermediary between the finance agencies and the investments they made, getting yet another set of fee for its `advice’ or `guidance.' Unable to discern any value to the proposal or actual expertise being offered we turned them away.

“Placement Agent Fees,” paid by pension funds generated considerable controversy and a challenge from the SEC.

The New York Times stepped into the fray with a business section editorial criticizing New York City Comptroller John Liu for wanting to ease a ban on placement agents.  See: Editorial: Bringing Back the Fixers, by Dealbook, February 22, 2010.  The editorial observed:
For years, the easiest way companies could get contracts to manage billions of dollars for the pension funds for either New York City or New York State was to go through the local influence peddler. It was a recipe for big corruption, especially in Albany.

Both the city and state stopped using placement agents last April after two top advisers to Alan Hevesi, the former state comptroller, were charged with corruption and violation of federal securities law relating to their "private" work as placement agents. The two pleaded not guilty and are expected to go on trial soon.

Another four fixers from the Hevesi era have pleaded guilty to securities fraud. And a California manager of a venture capital fund pleaded guilty in December to giving out nearly $1 million in illegal gifts to New York State officials to get contracts with the state pension fund.

State Comptroller Thomas DiNapoli said Thursday that the ban on placement agents is working well in Albany. He said it had made the investment process more transparent and helped new and smaller firms compete.

So, The Times asks, why is Mr. Liu going in the opposite direction?
Not quite two weeks later, Schwarzman was granted space in the Times to personally respond to the editorial.  He was arguing to support the position that Comptroller Liu has taken, that placement agents should be regulated, not banned, a position that would permit Blackstone to continue to ply its trade with New York pension funds as one of the four largest placement agents. See: Another View: In Defense of Placement Agents, By Stephen A. Schwarzman, March 4, 2010.
The four largest placement agents are part of major financial institutions in New York - Credit Suisse, UBS, Lazard and the Blackstone Group - and the professionals are federally registered and the firms themselves are heavily regulated. We do extensive due diligence on any manager we seek to represent (Blackstone's Park Hill Group takes as clients about 5 percent of the managers who come to it). We also prepare marketing materials and then take them before the major sources of investment capital - private, state and local pension plans; university and foundation endowments; sovereign wealth funds; etc. - to make the case as to why these managers warrant an investment. Most of these managers could not get a start in business without placement agents.
It is probably not to Comptroller Liu’s credit that he aligned with Schwarzman on this issue.  The alignment may have also put Liu in an interesting position when, three years later in the spring of 2013, Liu stepped up to oppose the sale and shrinkage of libraries with their attendant questionable real estate deals that Schwarzman was pushing for as a trustee of the NYPL.

When he wrote his Times rebuttal Schwarzman was already on record fighting against any bans on placement agents:
The SEC in May 2009 proposed the outright banning of placement agents , which in New York, California, New Mexico and Kentucky, were the conduit for corruption in those states' public pensions. However, the Private Equity industry was able to kill this SEC proposal, I believe by getting the Obama administration to pressure the SEC to water down this ban.

Blackstone's billionaire founder, Stephen Schwarzman, personally sent a letter to the SEC opposing a placement agent ban.
(See: Feds indict public pension placement agent, By Chris Tobe, March 20, 2013.)

A Hidden World, Where With a Lack of Transparency Pension Investors Take Hit for Fund Manager Wrongdoing
Photo used by the Times to emphasize Comptroller Scott Stringer's quote objecting to pension investors being saddled with the legal loss incurred from the settlement of the charges of improper conduct on the part of the fund managers
The recent article in the Sunday New York Times business section about the inappropriateness of pension funds investing in private equity funds focused mostly on the lack of transparency with respect to those funds and how that lack of transparency can conceal conflicts of interest that benefit the fund managers at the expense of the public investors.  Case in point, the quote featured from Comptroller Stringer was his objection to the fact that there had been a legal settlement respecting alleged misconduct of fund managers where the losses incurred with the settlement were passed along to be paid by the public pensioner investors, not the managers.  Given the lack of transparency of the private equity funds the public pensioners were probably in the dark that they are responsible for these costs, because according to the Times:
Their legal obligations are detailed in private equity documents that are confidential and off limits to pensioners and others interested in seeing them.
Notwithstanding, Comptroller Stringer said that forcing the pensioners to take the loss: "violates the spirit of the indemnification clause of our contract.”
Times reporting on the $325 million settlement to which Blackstone was a party
The comptroller was speaking of a settlement of a lawsuit against Carlyle Group and a number of other equity firms, (Bain, etc.), the Blackstone Group included, accused of colluding and market manipulations to drive down the prices of corporate takeover targets.  Blackstone, K.K.R. and TPG agreed to pay a combined $325 million to settle the accusations, the amount to be divided up between them in a manner unspecified t the public (K.K.R., Blackstone and TPG Private Equity Firms Agree to Settle Lawsuit on Collusion, by William Alden, August 7, 2014) and the Carlyle Group subsequently agreed to pay another $115 million in its own settlement.  Total, all of the firm settlements reportedly tallied $590.5 million (Carlyle Deal Concludes a Lawsuit Against Private Equity, by William Alden, September 8, 2014.)

The Sunday Times article makes it clear that Carlyle passed this loss along to New York City pensioners and that Comptroller Stringer's remark applies to them. When I asked whether the Blackstone was, or might be similarly passing its loss along to New York City pensioners I was quickly informed that the investigation is ongoing so that this information could not be furnished.  I put this question to the State Comptroller’s office at the same time and have yet to receive a response.
The Times article was front page and above-the-fold of the Sunday Business section
The Times article noted more on the absence of transparency:
"Hundreds of billions of public pension dollars have essentially been moved into secrecy accounts," said Edward A.H. Siedle, a former lawyer for the Securities and Exchange Commission who, through his Benchmark Financial Services firm in Ocean Ridge, Fla., investigates money managers. "These documents are basically legal boilerplate, but it's very damning legal boilerplate that sums up the fact that they are the highest-risk, highest-fee products ever devised by Wall Street."

Retirees whose pension funds invest in private equity funds are being harmed by this secrecy, Mr. Siedle said. By keeping these agreements under wraps, pensioners cannot know some important facts - for example, that a private equity firm may not always operate as a fiduciary on their behalf. Also hidden is the full panoply of fees that investors are actually paying as well as the terms dictating how much they are to receive after a fund closes down.

A full airing of private equity agreements and their effects on pensioners is past due, some state officials contend. The urgency increased this year, these officials say, after the S.E.C. began speaking out about improper practices and fees it had uncovered at many private equity firms.
The explanation from Blackstone and companies like it for the lack of transparency?:
Private equity giants like the Blackstone Group, TPG and Carlyle say that divulging the details of their agreements with investors would reveal trade secrets. Pension funds also refuse to disclose these documents, saying that if they were to release them, private equity firms would bar them from future investment opportunities.
Public Officials Don't Bargain?

On the very questionable absence of oversight by the public's elected officials making these investments the article quotes attorney Karl Olson, a partner at Ram Olson Cereghino & Kopczynski, who has sued he California Public Employees' Retirement System, to disclose fees paid to hedge fund, venture capital and private equity managers.
"I think it is unseemly and counterintuitive that these state officials who have billions of dollars to invest don't drive a harder bargain with the private equity folks," he said. "A lot of pension funds have the attitude that they are lucky to be able to give their money to these folks, which strikes me as bizarre and certainly not acting as prudent stewards of the public's money."
Conflicts of Interest?

On the subject of conflicts of interest that hide behind the lack of transparency the Times writes:
Regulations require that registered investment advisers put their clients' interests ahead of their own and that they operate under what is also known as a fiduciary duty. This protects investors from potential conflicts of interest and self-dealing by those managers. This is true of mutual funds, which are also required to make public disclosures detailing their practices.

But, as a lawsuit against Kohlberg Kravis Roberts shows, private equity managers can try to exempt themselves from operating as a fiduciary.
Abuse and the Breaking of Laws

It quotes another attorney in the area as follows:
"On one hand they say they don't owe you the duty," she said, "but everything is so confidential with these investments that without a court order, you don't have any idea what they're doing. It's not open and transparent, and that's the kind of structure to me that's ripe for abuse."
How ripe for abuse?  With this total lack of transparency and diligent review and bargaining how quickly would we know, for instance, if there was another Madoff in this thicket?  The Times reported that although private equity firms got off to a better start in their initial years, more recently:
. .  a simple investment in the broad stock market trounced private equity. For the five years through March, for example, private equity funds returned 14.7 percent, annualized, compared with 21.2 percent for the S.&.P. 500. One-year and three-year returns in private equity have also lagged.
And given the complicated calculations about who gets what monies in transactions, with the managers first in line, the investors always waiting to find out what they finally get, how late in the game after final reckonings would one know how bad, bad news is?  You can’t always get out of a hedge fund investment exactly when you’d like and when funds face liquidity problems they sometimes restrict withdrawals.

Madoff, of course, broke laws and a fairly high proportion of his victims were wealthy.  However, as must be noted with increasing frequency in our society, when it comes to the ways that the wealthiest use tilted playing fields to their advantage at the expense of others, the crime is not what activities are against the law, the crime is what is legal.  That’s the context in which this nation’s “plutocracy” is better understood as a "kleptocracy."

Laws can change.  Practices described here are in many ways similar and analogous to the kinds of abuses with respect to credit card and consumer lending, tricks and traps that Elizabeth Warren and new consumer regulations are working to proscribe.

Even by the relatively weak standards of what currently isn’t outlawed, it seems that legal lines are still crossed far too often.  According to the Los Angeles Times:
In a report on the SEC's findings after a preliminary round of examinations, agency official Andrew J. Bowden described what he called a "remarkable" level of lawbreaking and cheating among the 150 private equity advisory firms inspected so far. Bowden delivered his report directly to the lions in their den, speaking at a May 6 private equity conference.

"A private equity adviser is faced with temptations and conflicts with which most other advisers do not contend," Bowden stated. "We have seen that these temptations and conflicts are real and significant."

The most striking statistic: Half of all examinations uncovered "what we believe are violations of law or material weaknesses in controls."
(See:  SEC peeks under private equity rug, finds 'remarkable' corruption, by Michael Hiltzik- May 13, 2013.)

Rebates - Fluid Rules?

The New York Times article about high fees was preceded by several months by a thorough article addressing the subject that appeared in the Financial Times apparently sparked by the SEC investigation: Private equity: A fee too far- Regulators are probing conflicts of interest and high fees charged by fund managers to the companies they own, by Anne-Sylvaine Chassany and Henny Sender, July 13, 2014.

According to the article, one thing that is happening as investors and their advisors react to fees that “pump substance out of portfolio companies. . . the sort of greed you would typically see in investment banking" (quote from one advisor) is that investors are demanding, and getting, rebates of fees, on the order of 80%.  Such after-the-fact rejiggeing of the rules to fatten up a scrawny and inadequate return sounds faintly Ponzi-ish, though a crossing of that line has not been alleged on the part of any of the funds.*
(* In some fascinating articles however, questions have been raised about how, on the state official side of things, the state of New Jersey did poorly channeling monies into underperforming private equity funds,  Blackstone being one of the firms investments were handed off to, tripling fees being paid under Governor Christie while turning New Jersey into one of the nation's largest investors in hedge funds and then, and is now apparently trying to cover up "suddenly reporting higher results" . .  "a full 1% higher than previously announced".  "as if no one would notice the change."  See: New Jersey Funneling Pension Fund Cash to Wall Street Investment Managers, by David Dayen August 26, 2014 and Is New Jersey Fudging Its Pension Fund Results to Defuse a Christie Scandal? by Yves Smith, September 13, 2014.)
From the Financial Times article:
Even though these fees are increasingly refunded to investors, prominent institutions including some top university endowments are reluctant to back the most high-charging fund managers. "They have come up with a formula to enrich themselves more than their investors," says the chief of one leading US endowment.
The Financial Times article also examines ways that tax considerations contort private equity practices and funnel preferential benefits, another reason to close the kinds of loopholes that Schwarzman so watchfully protects.

Things may be coming home to roost, and there is one more sign that institutional investors, as the Times reports, are walking away from these deals more often: At the September 17, 2014 NYPL trustees meeting, home turf for Schwarzman, the trustees were told that the NYPL was implementing a shift in the last couple of years to take risk out of the portfolio, simplify and reduce fees.  Nevertheless, with 72% of its portfolio in public common stocks it still has 15% invested in alternative investments like hedge funds and 10% in private equity and real estate.

A Designated Villain?
Stephen A. Schwarzman leaving an NYPL trustees meeting March 12th outside of which demonstrators gathered to oppose the sale, shrinkage and deliberate underfunding of libraries.  Photo by Jonathan Barkey.
Are we being too hard on Mr. Schwarzman?  Are we asking too many hard, too many unfair questions?  Should we take less of a cue from, put less stock in how ostentatiously Mr. Schwarzman, himself, has declared himself to be antagonistically on one side of a class divide?

Is it just that Mr. Schwarzman sets himself up as too much of a target when he proclaims himself in superlatives, saying that Blackstone is, among other things, the world's largest real estate investment firm, the largest owner of houses in the United States, one of the "four largest placement agents," the world's largest investor in hedge funds, the "world's largest manager" (with $88 billion in 2008 and $200 billion in 2013) of "so-called alternative assets, such as private-equity, real-estate, and hedge funds-esoteric vehicles" mostly on behalf of "corporate and public pension funds, endowments of universities and other nonprofit institutions, insurance companies" with investors that included "Dartmouth College, Indiana University, the University of Texas, the University of Illinois, Memorial Sloan-Kettering Cancer Center, and the Ohio Public Employee Retirement System."?
This 2008 New Yorker article's title reference's Wall Street Journal coverage of a birthday party Mr. Schwarzman threw for himself that garnered negative attention for its ultra-lavishness  
How much of Mr. Schwarzman's being such a conspicuously large target accounts for a 2008 New Yorker story commencing with an evaluation that, with a sort of Gordon Gekko emblematic emphasis, Mr. Schwarzman:
. . had become the designated villain of an era on Wall Street-an era of rapacious capitalists and heedless self-indulgence that had driven the Dow Jones Industrial Average to new highs, along with the prices of luxury real estate and contemporary art, while the incomes of ordinary Americans stagnated or fell.
(See: The Birthday Party- How Stephen Schwarzman became private equity’s designated villain, By James B. Stewart, February 11, 2008.)

Are there lines that just shouldn't be crossed when making making money?  For instance, even if we believe that virtually, by definition, prisons should never be privatized and subjected to the profit-making motivations of incarcerating more people longer and for lesser infractions,* if prisons are privatized should it be off limits to invest in them?
(* Michael Moore had some ghastly fun with this in his "Capitalism: A Love Story" documentary segment running through unfortunately true facts about private prison operators kicking back money to judges to keep children in prison, the "kids for cash scandal".)
Are we too quick to hold NYPL trustee Schwarzman accountable for the debacle that was the sale of the Donnell Library or for the push for even more library sell-offs and shrinkage with the NYPL's Central Library Plan that, although the NYPL did not publicize it, would have involved public expenditures of over half a billion dollars?  Mid-Manhattan and the 34th Street Science, Industry and Business libraries were to be sold while the research stacks of the Central Reference Library holding three million books were to be destroyed.

Is it within bounds to observe that pulling back on resources like libraries helps send more people to prison?  According to Neil Gaiman:
I was once in New York, and I listened to a talk about the building of private prisons - a huge growth industry in America. The prison industry needs to plan its future growth - how many cells are they going to need? How many prisoners are there going to be, 15 years from now? And they found they could predict it very easily, using a pretty simple algorithm, based on asking what percentage of 10 and 11-year-olds couldn't read. And certainly couldn't read for pleasure.
(See: The Guardian- Why our future depends on libraries, reading and daydreaming, October 15, 2013.)

Mr. Schwarzman is not the only plutocrat who invests in such anti-social, currently money-making activities as hydro-fracking, with all its myriad long-term pollutions, toxins, water usurpation, radioactivity, earthquakes . .   When it comes to the ravaging the entire planet for the benefit of a few with the promotion of more fossil fuel use that will significantly bump up the effects of global warming, Schwarzman isn't likely to catch with the Kochs brothers, or even just David.  Brother David lives in the same building as Schwarzman, 740 Park Avenue, now an infamous symbol of wealth, income and political inequality with assists from Alex Gibney's documentary “Park Avenue: Money, Power & the American Dream”* and the book that preceded it, "740 Park: The Story of the World's Richest Apartment Building," by Michael Gross.
(*  The film targets New York Senator Charles E. Schumer as "a chief culprit" in protecting the "tax break benefiting hedge-fund moguls" including Schwarzman.)
David Koch who, with his brother Charles have also been attacking universal national healthcare, seems to has his name ubiquitously on everything these days despite such other anti-social activities as financing climate science denial.  Why should we then care or consider it inappropriate that Mr. Schwarzman's name should have appeared on the NYPL's 42nd Street Central Reference Library that would have been so ruined by the real estate deal oriented shrinkage plans he supported?

I think the answer is that it isn't just Mr. Schwarzman and his activities we should be objecting to and even though we are not, per se, talking the 1%, (actually the top tenth of 1%, .01% of all Americans) where an increasing imbalance of wealth is piling up, there are multiple other individuals we should be concerned about in that elite and exclusive group. . .

. . . Maybe it can be argued that putting David H. Koch's name on ballet theaters, NOVA Science episodes, hospital centers, or new oil-black public fountains outside the Metropolitan Museum of Art (weren't we better off with the old fountains and plaza?) somehow ameliorates the fact that we are trading in our environment, probably together with the planet's future, by letting Charles and David pursue ever greater wealth in whatever manner they choose.  Maybe it can also be argued that, in this besieged world where the middle class is already being squeezed out of existence with the spoils divided up, pension funds are best off partaking in dismantling the jobs of other workers in their state to curtail losses.  (That argument is suspect, however, if these equity funds don't even keep pace with the broader stock market). . . .

. . .  Nevertheless, does it make sense for us as a society to be signing on to losing propositions that shuffle wealth upwards and then content ourselves with these booby prizes as consolation?  Unless we are all in abject surrender mode, isn't it time to remove David H. Koch's name from all those public properties to which he has affixed it and remove Stephen A. Schwarzman's name from the NYPL's 42nd Street Central Reference Library?  Thereafter shouldn't we put a halt to the anti-social activities that have financed such ill-advised public honorings whether they be Mr. Koch's, Mr. Schwarzman's or anyone else setting such lamentable examples?