The Real Thing

“Shylock and Jessica” by Maurycy Gottlieb (1876)

Most people think the title of The Merchant of Venice refers to Shylock, who is the most prominent character in Shakespeare’s play. But the title page plainly identifies Antonio as “a merchant of Venice" and Shylock simply as “a Jew." This is, in some way, odd since Shylock is the one that Bassanio goes to when he needs the money. Antonio, who is the shipping business, doesn’t have the dough. And therein lies the germ of at least one of the many conflicts the play illuminates. Shylock cannot be a real merchant since being a Jew he would have been excluded from many of the activities of the merchant class, of which Antonio is a member.  He's condemned to the shadows of commerce, marginalized and made to feel as if any pretensions he might have to respectability were manifestations of a false self. Indeed Antonio looks down on Shylock for being a moneylender. And Shylock is in turn  contemptuous of the Janus-faced individual who has no qualms about seeking help from someone he vilifies to others. Clearly Shylock is as much a merchant as Antonio. Only he’s in what we now call finance. To take the racial element out of the mix, Shylock is a Venetian Warren Buffett while Antonio is the owner of one of the companies that would potentially comprise a proto-Berkshire Hathaway. Shylock wants his pound of flesh, but if he weren’t suffering from loss aversion, a neuropsychological issue by which people make decisions that are emotionally rather than rationally driven, he might be willing to take a piece of Antonio’s action rather than his flesh when his adversary's chickens (aka boats) come home to roost. Of course, for all the mixture of scholasticism and biblical scholarship that the play exudes (with its caskets, rings and bond), reason is hardly what’s at work. In one of the most brilliant though not oft quoted passages, Shylock explains his seemingly “motiveless malignity” (to quote Coleridge’s famous lines about Iago) thusly, “So I can give no reason, nor I will not/ More than a lodged hate and a certain loathing/I bear Antonio, that I follow thus/A loosing suit against him.” And later he declaims, “You have among you many a purchased slave/Which, like your asses and your dogs and mules/You use in abject and in slavish parts…Shall I say to you/ ‘let them be free and marry them to your heirs/ Why sweat they under burdens?’…The pound of flesh which I demand of him/ Is dearly bought, ’tis mine, and I will have it.” Even though he's offered three times the amount of the loan, Shylock still refuses to allow it to be paid off. So he's hardly a Shylock, for what he’s afraid of losing is not his money, rather the possibility of vengeance against the person who "hates our sacred nation...my bargains and my well-won thrift/Which he calls interest” and who called him a “misbeliever, cutthroat dog/And spet upon my Jewish gabardine.” When Portnoy’s Complaint was published Philip Roth was criticized for his portrayal of a Jew who masturbated into a piece of liver. Shakespeare, of course, was not Jewish, but the criticism over the ages has been similar. The English critic John Gross wrote a book called Shylock: A Legend and its Legacy about how Shakespeare’s character was used for Nazi propaganda. We live in particularly litigious times where multivalent literary creations run afoul of identity politics. Clearly Shylock’s humanity needs no apology. However, let’s play the devil’s advocate and make one. What would Shylock be today? Perhaps he’d be one of those money managers who refuse to invest in companies that produce fossil based fuels? After all, besides defaming Jews, Antonio's plainly a colonialist. Imagine the degree to which indigenous populations must have been exploited for the sake of the wealth merchants like him sought to accrue?

The Woodstock of Capitalism

Capitalism encourages individual initiative. Socialism and Communism squelch it. By responding to the profit motive, productivity is increased as is innovation. By comparison economies predicated on the collectivity are less expansive. When the Soviet Union and China opened their economies to free enterprise they experienced huge growth spurts. However, while a free society may lead to the growth of private enterprise and mercantilism, it requires a kind of regulation that is not necessary in the already regulated economy which Marx termed “the dictatorship of the proletariat.” Individuals as Thomas Hobbes would have agreed have to be protected against each other or self-will will run riot. That’s why it’s almost disconcerting to read that one of the great capitalistic juggernauts of all times, Warren Buffett’s Berkshire Hathaway, is run totally on trust. Thomas Hobbes would have been shocked to read the headline of Andrew Ross Sorkin’s recent Dealbook, “Berkshire’s Radical Strategy: Trust” (NYT, 5/5/14) In the piece Charlie Munger, the vice chairman of Berkshire, is cited on the occasion of the company’s annual meeting, which Sorkin describes being “known as  'Woodstock for Capitalists.'” “By standards of the rest of the world, we overtrust,” Sorkin quotes Munger as saying. “So far it has worked very well for us.” Sorkin offers another Munger quote from 2007 thusly: “A lot of people think if you just had more process and more compliance—checks and double checks and so forth—you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust.” Herbert Spencer, who was responsible for the term “survival of the fittest," turned Darwin’s natural selection into a capitalist concept which rendered a dog eat dog view of human existence. But Munger obviously puts much stock in altruism which in the Berkshire model can also be naturally selective. If there had been a stock called Altruism, it would hit the ceiling every time Berkshire held one of its Woodstocks.

The Curse of Indecision

Sarah Bernhardt as Hamlet

Hamlet was notoriously indecisive. He wasn’t sure whether it was best to live or die, but lots of people waffle about lesser issues. One of them is whether to buy or sell a stock. Should I take the money and run or hold on to my Berkshire Hathaway (selling at $167,993 a share—up $943—as this post is being written)? Should I suck it up when I’ve bet on a losing horse like Blackberry, the once red hot Research in Motion (selling at a meager $10.21, up $.09). JP Morgan traders –in the case of the London Whale, like passengers on the Titanic, found it’s not always so easy to extricate oneself from a sinking ship. Love is another area that indecision can play a big role. The sex is good with X, but is it love or lust? Is lust in fact a kind of madness, creating blindness to defects or is physical compatibility a good litmus test? X or Y may copulate like bunnies, but bunnies can also stray. Restaurants are another bone of contention, so to speak, for the indecisive. Is the warmth and familiarity of the local diner, with its mediocre food preferred to the wall to wall celebrities and indifferent reception at the Minetta Tavern? Is it preferable to enjoy the sun and sand on Jones Beach, or travel twice as far to exclusive Hamptons enclaves where you’ll spend half of your day looking for a place to park? To die—chemo, radiation or both?—to sleep, perchance to dream. Is the behavior addictive? Is a 12 step program and a higher power required to conquer it? Is it absolutely necessary to admit powerlessness? Has one sunk so low that one must gives ones will up to God? Or is it just a “problem” which can be controlled with the exercise of will? And then, of course, there’s the most important decision of all, a real life changer. PC or Mac? 

The Odyssey of Warren Buffett

Leave it to Warren Buffett to invite his opponent to the huddle with fourth down and goal to go. It takes a certain level of confidence to tolerate criticism. It’s also smart. Knowledge is power. Better to know what you’re up against. In his recent Dealbook column (“Buffett Picks His Bear for His Annual Meeting," NYT 3/4/13) Peter Lattman describes how Warren Buffett’s annual letter to stockholders “said that he ‘wanted to spice things up’ by finding a money manager with an unfavorable view of Berkshire Hathaway to participate in the company’s annual meeting…often described as the Woodstock for capitalists.” Would there actually be over 18,000 Berkshire Hathaway investors smoking grass and rolling nude in the Omaha mud when the meeting takes place on May 4th?  Unlikely, but as Lattman reported Buffett chose Douglas A. Kass of Seabreeze Partners Management who is also a writer for The Street and commentator on CNBC to be the bear. And Kass pulled no punches according to Lattman’s account, alluding to Buffett’s “advanced age” and “Berkshires large size” as weak points. Buffett has never been afraid to call a spade a spade and these are reasonable criticisms. He once termed derivatives “financial weapons of mass destruction.” It will be curious to see how he deflects these arrows. Remember Buffett always goes against the grain. He’s still buying newspapers when everyone thinks newsprint is moribund (albeit the $344 million outlay in the past 15 months represents a relatively small portion of Berkshire’s portfolio). Will Buffett be like the wily Odysseus getting at Polyphemus aka the bear's Achilles' heel?